Maryland is right to move ahead with plans for establishing a state health-insurance exchange, despite uncertainty over the ultimate outcome of pending court challenges to the federal health-care reform law. Even if the Supreme Court were eventually to find that all or parts of the federal law violated the Constitution — such as the individual mandate requiring everyone to buy private insurance — a vigorous state exchange would still make quality care available to thousands more Marylanders, as well as make insurance rates and coverage plans more transparent for individual consumers and small businesses.
Last week, the state received an additional $27.2 million in federal grants to hire staff and set up the electronic infrastructure for the exchange. That's in addition to about $6 million the state received earlier this year for initial start-up costs for the program. The federal largesse has meant that the actual cost to state government for creating the exchange has been minimal, which has given Maryland all the more incentive to move quickly so that it can hit the ground running by 2014, when the most important changes mandated by the federal law kick in.
The exchange will be an independent government agency with a nine-member board consisting of six members appointed by the governor, plus the state health secretary, the state insurance commissioner and the executive director of the Maryland Health Care Commission. Its purpose will be to set overall policy and to make any changes to the state's current health care system needed to bring it into compliance with the federal law.
While the exchange itself won't have the power to directly set insurance rates, it will choose best values over a range of coverage levels for consumers and small businesses and promote only those in its offerings. It will also set minimum benefit levels and other aspects of the plans it endorses, so consumers won't have to wade through the fine print of hundreds of competing policies to find the best deals. Individuals and businesses could still buy insurance plans that aren't listed on the exchange, but they'd likely have to pay more for them.
The state is moving ahead with the exchange even though the federal law requiring them is currently under constitutional challenge in the courts. Last week, a federal appeals court in Atlanta struck down a provision of the law that requires Americans to buy health insurance or face a fine, though in June the federal appeals court in Cincinnati upheld the law in its entirety, and a federal appeals court in Richmond is expected to issue its own ruling soon. If, as seems likely, the issue ultimately ends up in the U.S. Supreme Court, its decision will control how state health insurance exchanges across the country are allowed to operate.
No one can know how the Supreme Court will rule, if and when it is called on to render a decision on the federal health care reform law. But there are certainly several conceivable outcomes that would not affect the ability of Maryland's health insurance exchange to operate. Regarding the individual mandate, for example, the court could declare that Congress exceeded its authority by mandating that everyone buy insurance, yet still allow state legislatures to impose such a requirement.
In that case, states like Massachusetts, which passed a health care reform law in 2006 requiring all state residents to buy coverage, could continue enforcing its individual mandate. Such an outcome would also allow Maryland's General Assembly to impose a similar requirement, if lawmakers here decided that was the best way to extend coverage to the 700,000 state residents who currently lack health insurance.
But regardless of what happens to the individual mandate or other contested aspects of the federal law, the efficiencies and cost savings built into Maryland's health exchange are still projected to cut the number of the uninsured in half and save the state $850 million by 2020. Given the urgent need to curb spiraling health care costs and improve the quality of care available to patients, that's a goal worth pursuing, no matter what happens with the repeal effort in Washington