Most health insurers like to enroll healthy people, so they can be confident that premiums paid will exceed medical claims. Maryland Health Insurance Plan enrolls mostly sick people - those who get turned down by private insurers.
Most health insurers raise premiums and reduce benefits. MHIP has been reducing premiums and raising benefits.
Across the country, politicians and policy wonks have been talking about how to cover more of the uninsured. MHIP is actually doing it. Membership, now just over 10,000, has jumped 40 percent in the past year and has doubled in the past two years, creating new concerns as its board works to sustain the growth.
While MHIP has succeeded in covering more of the state's most vulnerable citizens, its potential for reaching large numbers of the state's 780,000 uninsured is limited because only a fraction are eligible for the state-subsidized program. Richard Popper, MHIP's executive director, estimates that perhaps 40,000 state residents have conditions that bar them from getting affordable private health insurance, assuming they can get it at all.
Still, MHIP's funding mechanism, an assessment on hospital bills, could offer a possible template for other efforts to cover the uninsured. Del. James W. Hubbard, a Prince George's County delegate who has sponsored a number of coverage expansion bills, said lawmakers will explore that possibility over the next year.
It was the hospital assessment that enabled MHIP's rapid growth, which is remarkable compared with other high-risk health insurance pools. The locked-in funding funneled tens of millions of dollars into its reserves in the program's first years when enrollment was low. The financial cushion allowed MHIP to cut premiums and improve benefits as it actively sought more members.
"Maryland is off-the-charts unusual in that it made affirmative efforts at outreach. Most other high-risk pools hide," said Karen Pollitz, who was an MHIP board member until last summer and studies high-risk pools at the Institute for Health Care Research and Policy at Georgetown University. Nationally, membership in high-risk pools has been flat for the past several years, Pollitz said.
One of those drawn in by outreach efforts in the past two years was Colleen Smith, 26, who operates a day care business at her home in Ellicott City. She said she had been denied coverage by CareFirst BlueCross BlueShield because of a not-precisely-diagnosed medical condition she described as "girl problems" and because of her weight.
"I was getting medical care, but it was, like, breaking the bank," said Smith, who makes less than $20,000 a year. "I'm working full-time and going to school full-time, and I had no savings."
With MHIP's low-income subsidy, she pays $132 a month (compared with $182 that MHIP charges higher-income people her age, a savings of $600 a year for her).
"It has been amazing," she said. "It has allowed me to actually see doctors and work on making my health conditions better," including a specialist for her health and a dietitian for her weight.
Indeed, MHIP's sense of mission was even evident at a legislative hearing in Annapolis last month.
After Tobi Dradczyk, of Walkersville, described her anxiety over being uninsured after being diagnosed with gestational diabetes, Popper rushed to catch her in the hallway to get her name and address so he could send her an application.
But success has created its own set of issues for MHIP's board: How can it afford to keep adding members with costly medical needs? How can it best employ its reserves? Should its focus be limited just to the hard-to-insure, or should it consider using its funds to widen coverage for all state residents?
In the wake of a surge in new members like Colleen Smith, MHIP's board voted this month to bump up premiums for next year, and add a two-month restriction on covering pre-existing conditions for new members. Those changes were opposed by the board's two consumer representatives, but the board majority wanted to make sure the program's costs wouldn't exceed its funding from an assessment on hospital bills in the state.
Popper said the board wants the coverage to be affordable, but not so low-cost that it creates a so-called "crowd-out" effect, discouraging employers from offering, or individuals from signing up, for employer-provided coverage.
"I use the Home Depot analogy," Popper said. "There are cracks in the system, and MHIP is the caulk to fill the cracks. But you don't want to overcaulk."
At the same meeting the board voted to turn over $75 million in surplus, built up in earlier years when enrollment was low, to the state to help finance an expansion of Medicaid insurance for low-income adults.
"We could have covered 2,000 additional individuals for two or three years," by spending down the surplus, Popper said. "Or we could get federal matching funds and cover 50,000 people in the Medicaid program."
Kaye Pestaina, one of the consumer board members, said she didn't object to the transfer of funds to Medicaid, but didn't think MHIP should be raising premiums and imposing limits on coverage of pre-existing conditions at a time when it still had funds available.
"The thinking was that the board should use funds to break even every year," Pestaina said. "It's a good theory, but the plan should be able to use the surplus to make coverage more affordable."
Some, in fact, would like to see MHIP going in the opposite direction - cutting premiums even further. The state chapter of the Multiple Sclerosis Society, for example, backed a bill, which died in committee on Thursday, that would have lowered premiums for some disabled people.
"If you're on Social Security disability, chances are you're not working and don't have any other form of insurance," said Nancita Rogers, 56, of Catonsville, who has multiple sclerosis and is active in the society.
Although she qualified for retiree insurance from her job, she said, her friends on disability typically get $800 to $1,200 a month - putting even MHIP's lowest subsidized premium, $190 a month for someone her age, largely out of reach.
Once officially qualified as disabled, people can get Medicare coverage regardless of age - but only after a two-year waiting period. During that time, she said, "You may have no access to health care on any level, not prescriptions or anything."
It was dissatisfaction with an existing program that led to MHIP's creation in 2002. A decades-old program gave "insurers of last resort," particularly CareFirst, a discount on hospital bills if they would offer policies to all comers regardless of their medical history.
Legislators decided that the old program cost too much and enrolled too few. They scrapped the discount and substituted a hospital assessment - 0.81 percent of each bill - to subsidize the gap between MHIP premiums and operating costs. Premiums paid by MHIP enrollees currently are about a third of what it spends for health care.
MHIP's start wasn't promising.
Just two months before MHIP began operations, Bethlehem Steel Corp. retirees lost their health coverage in the company's bankruptcy, and MHIP assumed the added assignment of covering the Beth Steel retirees and others in a similar position.
Unsure whether its hospital assessment would cover both those from the old program and the unexpected influx of Beth Steel retirees, MHIP did little marketing at first.
Also working against enrollment initially, according to Popper, were "customer service and processing that were not as they could have been," a limited network of doctors (about 8,000, or a third as many as now), and a lack of familiarity with the program among insurance agents and brokers.
Membership plummeted - from more than 7,000 on opening day, to less than 5,000 by the end of 2004.
With the hospital assessment generating income, but fewer members than expected, MHIP's reserves grew.
"Other states assess after the fact, so, inherently, there would not be any buildup," said Wayne Nelson, president of Communicating for America, an advocacy and service organization for farmers and the self-employed. "It gives the program in Maryland the opportunity to do innovative things that most states can't do." Nelson's organization does an annual report tracking enrollment, premiums and other trends in the 34 state high-risk pools.
Using its funding cushion, MHIP took steps in late 2004 and in 2005 to turn things around: launching a marketing program, improving benefits, cutting standard rates and adding a low-income premiums subsidy.
Somewhat surprisingly, one of the most effective, Pollitz said, was the development of a simple and inviting "mini-application" for MHIP that CareFirst agreed to include when it sent a letter of denial to people applying for insurance.
"It has a daisy on it, and smiling faces," Pollitz said.
Going forward, MHIP's future depends in part on the response to its premium increases. Another uncertainty involves the proposed Medicaid expansion. The House of Delegates has approved it, but the Senate, at least so far, has balked at a tobacco tax increase to help fund it. If there's no Medicaid expansion, MHIP will keep the $75 million surplus.
If the reserves go to Medicaid and enrollment continues to rise, MHIP could find money tight. One option would be to ease the crunch by reducing or eliminating its marketing efforts. But, Popper said, at least for now, that won't change.
"No decision was made to cease and desist the outreach effort," he said.
MHIP at a glance
Health insurance for people who have difficulty getting coverage in the private market
Who is eligible
People who have any one of 60 qualifying medical conditions such as diabetes, cancer, sickle cell disease and congestive heart failure
People who have been turned down for private insurance for medical reasons
People who have been offered insurance that excludes chronic conditions or has a substantially higher premium than MHIP
People who have lost employer coverage and have exhausted their continuation (COBRA) rights
People whose job has been affected by foreign trade
People age 55 to 64 who are receiving a pension from the Pension Benefit Guaranty Corp.
People moving to Maryland who were enrolled in a high-risk pool in another state
Depending on age and benefits chosen, individual coverage from $111 to $682 a month. Lower premiums for those with low to moderate income (up to $45,000 for a family of four).
Where to get information
Web: www.marylandhealthinsuranceplan.state.md.us MHIP by the numbers A look at the current fiscal year: Members: 10,000. Projected expenses: $99.5 million, including $93.9 million in claims and $5.6 million in administration costs. Projected revenue: $112.5 million; $34.4 million in premiums and $78.1 million from the state hospital assessment. The assessment is 0.81 percent on all Maryland hospital bills paid by private insurers, government programs and individuals. Plans: MHIP offers plans at varying rates according to the deductible chosen and whether the member selects a preferred provider (PPO) plan, a high-deductible plan or an "exclusive provider" plan that doesn't cover out-of-network care but has no deductible. Premiums also increase with age. Premiums: Premiums are set at a markup from standard market rates. Next year the premiums for PPO coverage will rise to 130 percent of standard individual market prices from 120 percent now; the EPO cost will increase to 120 percent from 110 percent. Subsidies: Premiums are reduced for individuals with incomes under $22,050. Lower premiums are also available for families; for example, a family of four qualifies if household income is below $45,000. These limits will increase next year. Source: Maryland Health Insurance Plan.