The cost of health insurance premiums would soar even more next year under rate increases requested by insurers for plans sold on the state’s health insurance exchange.
The state’s two insurers offering individual plans under the insurance program known as Obamacare requested average rate increases for 2019 that ranged from 18.5 percent to 91.4 percent, depending on the type of plan.
The higher proposed rates — the fourth year of big increases — would place a huge burden on Marylanders already struggling to pay for insurance and could threaten the viability of Obamacare in Maryland, officials said.
But insurers, lawmakers, state regulators and consumer advocates hope the federal government offers a reprieve.
State officials plan to ask the Centers for Medicare & Medicaid Services for permission to establish a reinsurance program that would create a pot of money for insurers to cover the most expensive claims. In a bipartisan effort to preserve the expansion of health insurance in Maryland and rein in rising costs, the General Assembly passed legislation this spring with support from Gov. Larry Hogan opening the door for the effort.
If approved, the reinsurance program could allow the insurers to reduce their requested rate increases by as much as 30 percent.
Without the program, Obamacare in the state is headed toward collapse, said Chet Burrell, CEO of CareFirst BlueCross BlueShield, the state’s dominant insurer.
“I think this many years in, we are in advanced stages of a death spiral. ..,” Burrell said. “Our hope is the legislation in Maryland would stabilize the premiums going forward.”
There is no guarantee federal officials will approve the state’s plan. A similar request by Minnesota was approved, but Oklahoma pulled its application last year after it didn’t get approval in time to set new rates.
Bradley Herring, a health economist at the Johns Hopkins Bloomberg School of Public Health, said he would be shocked if the Trump administration approved such a request, given its efforts to weaken Obamacare.
While the health program hasn’t been repealed, the administration eliminated the individual mandate, a penalty imposed on people who don’t buy insurance, starting next year. Many say this could weaken the program significantly because many could choose not to sign up.
“It just seems very unlikely to me that Trump would approve this,” Herring said. “Maryland is easily saying we want to help prop up Obamacare, which the Trump administration doesn’t want to have anything to do with.”
Without the reinsurance program, “the state is screwed in that it can’t really do anything to fix this problem,” he said. “Things are going to get worse before they are going to get better.”
The insurers’ proposed rates still must be reviewed and approved by the Maryland Insurance Administration. In the past, the commission has both increased and decreased the rates insurers have requested.
CareFirst and Kaiser could ask for an adjustment to their requests if a reinsurance plan is approved.
The commission usually makes a decision on the rate requests around Labor Day, and plans would go on sale on the exchange this fall.
The number of people buying insurance on the exchange has dropped 13 percent in the past year as rate rises have increased premiums, said Insurance Commissioner Al Redmer Jr.
The rates have increased because the number of sick people buying plans is disproportionate to the number of healthy people. Sicker people are more costly to insure.
Insurers had anticipated more sick people in the first years of Obamacare. The thought was that if sick people who had never gotten coverage started seeing a doctor they would get healthier.
Instead, many have chronic conditions that need years of costly care, CareFirst’s Burrell said. He said the insurer will have lost $476 million on exchange plans by the end of this year.
“Our goal from the very beginning has always been to break even on this line of business, never to lose any money,” he said. “But as you can see, we have major, major losses. The reason for this is the rates have simply not kept up for as costly as it is to take care of the population.”
The highest rate request submitted to the Maryland Insurance Administration was a 91.4 percent increase from CareFirst for its “preferred provider organization” plan, which covers about 15,000 people. A 40-year-old man who doesn’t smoke would pay $1,344 a month in premiums for that plan.
Obamacare does subsidize the premiums people pay based on their income. Most Marylanders who purchase insurance on the exchange qualify for those subsidies.
Carefirst is seeking an average rate increase of 18.5 percent for its HMO-style plan, which covers about 123,000 people. Kaiser Permanente of the Mid-Atlantic States has asked for an average increase of 37.4 percent for its HMO plan, which covers about 74,000 Marylanders.
“We have folks in Maryland that are struggling,” Redmer said. “They are trying to do the right thing and they are paying more for their health insurance than they are for their mortgage. While an 18 percent increase is better than last year, it’s still in some cases, catastrophic, if you’re the young family that has got to pay that 18 percent increase.”
Kaiser Permanente said in a statement that it is trying to ensure it can sustain high-quality care over the long run.
“These proposed rates reflect the expected costs of providing coverage for these members, including the impact of eliminating the individual mandate penalty,” the company said.
Maryland Sens. Ben Cardin and Chris Van Hollen, both Democrats, told reporters the rate requests were unacceptable, and blamed the Trump administration.
They said the administration and congressional Republicans have sought to sabotage the health care system after failing to repeal the Affordable Care Act.
The rate proposals “just underscore what President Trump’s administration has done to adversely affect the individual markets,” Cardin said. “They have taken direct steps to basically make it not work.”
Cardin said the state’s proposed reinsurance program could help stave off the negative consequences.
The state would generate $462 million for the reinsurance fund from the federal government and a state tax on the insurers.
While Kaiser supports a reinsurance program, it said any program needs to be implemented fairly. Kaiser officials have testified that the state’s proposal favors CareFirst unfairly because it could result in the state’s largest insurer’s being paid twice for high-risk members, once by a federal risk adjustment program and again by the reinsurance program.
Advocacy health group Consumer Health First urged consumers not to be alarmed by the sticker shock of the rate requests and said they too are hoping for reinsurance.
“We caution consumers to remember that the requested rate increases are not final,” the group said in a statement. “If the state reinsurance program is authorized by the federal government and implemented in Maryland, consumers will see more affordable premiums in the individual market for the first time in many years.
Baltimore Sun reporter Jeff Barker contributed to this article.