Today the Maryland Insurance Administration is holding what must count as a remarkable hearing. Officials will be hearing evidence about whether the two carriers on Maryland’s Affordable Care Act exchange should be allowed to lower their rates for 2019. Just months after CareFirst BlueCross BlueShield and Kaiser Permanente asked for rate increases of 30 percent or more, the insurers say the rates for their health maintenance organizations should instead be reduced by 22.3 percent and 7.8 percent, respectively. This is what happens when members of both parties actually try to solve the problems in our health care system rather than exacerbating them for political gain.
Gov. Larry Hogan, a Republican, and the Democrat-majority General Assembly (notably, Del. Joseline A. Pena-Melnyk and Sen. Brian Feldman) deserve credit in equal measure for preventing the impending disaster in the Maryland Health Benefits Exchange that had been brought on by the concerted efforts of the Trump administration and Republican majority in Congress to cripple the Affordable Care Act. Federal actions including the repeal of the requirement that individuals buy health insurance and the cessation of certain payments under the ACA threatened to create a death spiral on the marketplace here and in other states as younger and healthier consumers chose to go without coverage, leaving older and sicker customers in the risk pool, further driving up costs. It’s a phenomenon called “adverse selection.” Governor Hogan and legislative leaders vowed at the beginning of this year’s General Assembly session to find a solution, and they did, largely without fanfare. It was a politically risky move for both sides — and especially so for Mr. Hogan, since part of the plan can be construed as a tax increase — and it worked.
But maybe not forever. The Hogan administration persuaded the Centers for Medicare and Medicaid Services to approve the creation of a “reinsurance” program here that uses state funds to cover the costs of some of the most expensive patients on the exchange, thus reducing prices for everyone else. But the money comes from the state imposition of a health insurance premium tax that had previously been collected by the federal government. Last year’s federal tax cut bill suspended the tax for one year, and Maryland lawmakers and Governor Hogan agreed to impose it for one year. The $365 million that is expected to generate should be enough to fund the reinsurance program for two years, but after that, there are no guarantees.
Boosters hope that the problem might take care of itself by then — if the lower rates convince enough health consumers to buy policies on the exchange, they could reverse the “adverse selection” problem it now faces. It’s also possible that Democrats will take control of one or both chambers of Congress by then and will work to protect the ACA rather than undermine it. But Maryland’s leaders shouldn’t count on it. There are several steps state leaders can take to make this fix permanent, and voters should demand that candidates for governor and the General Assembly commit to them before November’s election.
The first and most obvious to pledge to maintain the premium tax at the level necessary to maintain the reinsurance system regardless of whether the federal government reinstates it. The more predictability and stability we can build into the system, the better. Second, Maryland needs to enact its own version of the individual mandate, as Massachusetts has. That policy would compliment the reinsurance pool by bringing more customers into the system and driving down rates. Properly structured, it could serve to decrease the ranks of the uninsured rather than generate revenue for the government. Third, the state must look for ways to reduce the level of overall health care costs. Maryland is an innovator in that regard, thanks to our unique system of hospital rate-setting that was expanded under the Hogan administration to cover physician payments and other elements of health care spending. Health care advocates are pushing for candidates to support the creation of a prescription drug affordability board, which would build on Maryland’s hospital rate-setting experience to control runaway drug costs. Democratic gubernatorial candidate Ben Jealous signed on to the effort today.