Explaining Maryland's Health Care and Insurance Reforms


The health care reform bill signed into law last week by the governor has been praised as one of the most important bills that passed during the 1993 session and rightfully so. The General Assembly took a giant step forward beyond previous reform efforts. All those involved in the passage of this bill; the General Assembly; especially Del. Casper Taylor and Sen. Thomas Patrick O'Reilly; the interest groups which worked to help rather than hinder the process; and Gov. William Donald Schaefer who kept the lines of communication open, deserve our thanks.

This legislation has received considerable attention nationally, again rightfully so. States are very anxious to cover their uninsured. Numerous proposals for reforming the health care system to address both the uninsured and the cost problems have been offered. The proposals range from complete overhauls to incremental changes.

The health care system is so complex and the problems of cost and access are so vexing that at times they seem insurmountable. Many states are attempting to remedy the problem by raising taxes. Maryland's approach is more sensible. We are attacking the source of the problem rather than only treating the symptoms.

The governor has believed that we need to do all we can to see that all who could be insured, are insured. In Maryland, more than half of the uninsured work for or are dependents of those who work for small employers. Therefore, a logical first step is to encourage small employers to purchase benefits for their employees.

The new health care reform law will require insurers and HMOs to pool together the small groups of two to 50 employees and develop a community rate based on the experience of the pool. The creation of this large pool spreads risk and eliminates our current problem where an employer with a single sick employee may pay five times more for the same benefits. Insurance will become affordable to employers who have not been able to purchase it.

To assure that community-rated policies are available to all employers, insurers and HMOs who provide insurance to small groups must accept any group and must renew the policy each year. Employers will not be denied coverage or renewal because of the health status of their employees. Insurers will be limited in excluding coverage of pre-existing conditions. The end of pre-existing conditions limitations will make insurance available to those who could not obtain it due to some medical condition. Also, individuals will not risk losing their health insurance when changing jobs.

The health care reform law also takes advantage of the changes which community rating will create in the insurance market in Maryland to increase access further. We anticipate that with the move to community rating, employers who are now self-funding their employees' health care will re-enter the insurance market. As this happens and the pool of insured becomes large enough to accept some additional risk, the insurance commissioner may require all insurers to offer open enrollment. An individual will be given an opportunity every year to enroll with the insurer or HMO of his choice.

The second major component of the bill creates the Maryland Health Care Access and Cost Commission to address our other major enemy -- cost. The commission will have three major functions -- development of a standard health insurance benefits package, medical care data analysis, and the creation of costs targets and payment systems for all licensed health care practitioners and office facilities.

The commission is to develop a comprehensive standard benefit package to be offered by all insurers and HMOs. The standard package will be the minimum that may be offered in Maryland. If an insurer or HMO chooses to offer additional benefits, those additional benefits must be priced separately. This will allow easier comparison shopping for employers who are looking for the best price for benefits. Once employers start shopping, insurers will be forced to become better managers of care in order to keep their prices competitive.

Medical care data analysis is vital if we are to understand what is driving health care costs. Comprehensive analysis will enable us to make better policy decisions and give us new and better cost containment strategies. Beginning in 1995, providers will be required to submit claims to insurers electronically. This will simplify data collection and reduce administrative costs for providers and insurers.

The medical data analysis will also allow the commission to accomplish its last goal; the creation of cost goals and the design of payment systems for all licensed practitioners and office facilities. Annual, statewide cost goals will be established for providers, and general information will be published on provider reimbursement. If voluntary efforts to constrain costs are unsuccessful, the law gives the commission additional power to limit practitioners' fees.

This will be Maryland's first attempt at controlling the costs of non-hospital services, although we have a proven track record in the setting of hospital rates under the auspices of the Health Services Cost Review Commission.

Repairing the dysfunctional small employer insurance market and controlling costs must be the first step to access, for it is only when insurance is affordable that it will truly be accessible. This is a regulatory approach to reform, but we believe we can build on the successes we have had in regulating hospital costs. The governor, the General Assembly and our citizens should be proud of our accomplishments this year. We now have an excellent base for our future reform efforts.

Nelson Sabatini is secretary of Maryland's Department of Health and Mental Hygiene.

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