In­sur­ance rate cuts an­nounced

Emer­gency state leg­is­la­tion sta­bi­lized health mar­ket­place

The Calvert Recorder - - Front Page - By PAUL LAGASSE pla­gasse@somd­

Ef­forts by state leg­is­la­tors of both par­ties and Gov. Larry Ho­gan (R) to sta­bi­lize Mary­land’s in­di­vid­ual health in­sur­ance mar­ket paid off last week when CareFirst and Kaiser Per­ma­nente both an­nounced an­nual rate de­creases for in­di­vid­ual health plans be­gin­ning in Jan­u­ary.

Had emer­gency leg­is­la­tion not been passed dur­ing this year’s Gen­eral As­sem­bly ses­sion, rates for some peo­ple would have nearly dou­bled and spi­ral­ing costs might have forced both com­pa­nies to with­draw en­tirely from the state’s in­di­vid­ual health in­sur­ance ex­change.

“For the first time since the Af­ford­able Care Act went into ef­fect, all in­di­vid­ual in­sur­ance rates in Mary­land will go down in­stead of up,” Ho­gan said in a press re­lease an­nounc- ing the rate re­duc­tions.

Mary­land In­sur­ance Ad­min­is­tra­tion Com­mis­sioner Al Red­mer Jr. an­nounced that the new in­di­vid­ual rates that have been ap­proved for 2019 rep­re­sent a 7.4 per­cent de­crease for Kaiser’s Health Main­te­nance Or­ga­ni­za­tion plans, an 11.1 per­cent de­crease for CareFirst’s two Pre­ferred Provider Or­ga­ni­za­tion plans and a 17 per­cent de­crease for CareFirst’s HMO plan.

Had the rein­sur­ance pro­gram not passed, Kaiser’s HMO plan, which has nearly 70,000 mem­bers across the state and serves north­ern Charles and Calvert coun­ties, would have seen rates go up an av­er­age of 37.4 per­cent next year.

Rates for CareFirst’s HMO plan would have

gone up an av­er­age 18.5 per­cent, and their two PPO plans would have sky­rock­eted by an av­er­age of 91.4 per­cent. CareFirst serves all of Calvert, Charles and St. Mary’s coun­ties.

The emer­gency leg­is­la­tion redi­rected fed­eral funds that the state re­ceives through a pro­gram called the State In­no­va­tion Waiver to help re­duce the fi­nan­cial risk to health in­sur­ance providers that par­tic­i­pate in the state’s health ben­e­fits ex­change.

Com­monly re­ferred to as a Sec­tion 1332 waiver in ref­er­ence to the clause in the Af­ford­able Care Act that es­tab­lished it, the pro­gram awards fund­ing to states as a re­ward for keep­ing health care costs down with­out com­pro­mis­ing the qual­ity and breadth of pa­tient care.

Sen. Thomas M. “Mac”

Middleton (D-Charles) cham­pi­oned the Se­nate bill that pro­posed redi­rect­ing the fed­eral funds, which Ho­gan signed into law in early April.

The Cen­ters for Medicare and Med­i­caid Ser­vices ap­proved Mary­land’s ap­pli­ca­tion for the Sec­tion 1332 waiver in Au­gust. The Mary­land In­sur­ance Agency then had to re­view and ap­prove CareFirst’s and Kaiser’s pro­posed new re­duced rates be­fore an an­nounce­ment could be made.

Health in­sur­ance rates rose statewide in Jan­u­ary as a re­sult of a de­ci­sion last Novem­ber by the Trump Ad­min­is­tra­tion to elim­i­nate fed­eral fund­ing for cost-shar­ing re­duc­tions that peo­ple could use to help off­set their health in­sur­ance costs.

In Mary­land, the elim­i­na­tion of the fed­eral fund­ing drove in­creases of 58.2 and 76 per­cent for CareFirst’s HMO and PPO plans, re­spec­tively, and 43.4 per­cent for Kai-

ser’s HMO plans for this year.

The im­pact of the rate de­creases could be sig­nif­i­cant for many South­ern Mary­land res­i­dents, said Todd Switzer, the Mary­land In­sur­ance Agency’s chief ac­tu­ary.

“If ever there were a time for South­ern Mary­lan­ders to con­sider be­com­ing in­sured and to shop care­fully, 2019 is the year,” Switzer said.

Ac­cord­ing to Switzer, monthly sub­si­dies in the form of ad­vance pre­mium tax cred­its, or APTCs, will be higher for many St. Mary’s County res­i­dents as well as for many peo­ple in parts of Calvert and Charles coun­ties not near the Prince Ge­orge’s County bor­der, be­cause CareFirst is the only such provider in those ar­eas.

Switzer said that the av­er­age 40-year-old who earns be­tween 100 and 150 per­cent of the fed­eral poverty level liv­ing in those ar­eas could re­ceive sub­si­dies of up to $630.

“In many cases, this will mean that cov­er­age can be ob­tained for ‘free’ since the sub­sidy ex­ceeds the pre­mium,” Switzer said.

For those parts of Calvert and Charles coun­ties served by both Kaiser and CareFirst, the APTC sub­sidy will be less, at $356 for the same hy­po­thet­i­cal cus­tomer, but still enough to sig­nif­i­cantly re­duce their pre­mi­ums.

Switzer noted that just un­der 11,000 peo­ple in South­ern Mary­land do not have health in­sur­ance — 2,700 in Calvert, 4,800 in Charles and 3,400 in St. Mary’s. More than half of them, Switzer said, are el­i­gi­ble for APTCs or Med­i­caid sub­si­dies.

Sen. Chris Van Hollen (D-Md.) said Mon­day that Mary­land’s Con­gres­sional del­e­ga­tion had ad­vo­cated for the ap­proval of the waiver re­quest.

“I am com­mit­ted to mak­ing sure that fam­i­lies have ac­cess to qual­ity, af­ford­able health care,” Van Hollen said. “This

leg­is­la­tion … will lower pre­mium costs for peo­ple across our state.”

Van Hollen pledged to con­tinue ad­vo­cat­ing for im­prov­ing the health care op­tions avail­able to Mary­lan­ders as well as “work­ing to hold this Ad­min­is­tra­tion ac­count­able for its ef­forts to un­der­mine the Af­ford­able Care Act.”

Rep. Steny Hoyer (DMd., 5th) praised the work of state leg­is­la­tors and Ho­gan in work­ing to­gether to pur­sue “state-level so­lu­tions” to re­duce the in­sur­ance pre­mi­ums.

“How­ever, con­sumers in Mary­land would likely be pay­ing even less for their cov­er­age if it weren’t for the sab­o­tage ef­forts of the Trump Ad­min­is­tra­tion and Con­gres­sional Repub­li­cans,” Hoyer said Mon­day. “Congress ought to be do­ing more to sta­bi­lize in­sur­ance mar­kets and ex­pand ac­cess to cov­er­age for Mary­lan­ders.”

Middleton said that the

bi­par­ti­san ef­fort to craft Se­nate and House of Del­e­gates bills that would al­lo­cate the 1,332 waiver funds to the rein­sur­ance pro­gram was one of the most im­por­tant pieces of leg­is­la­tion passed in this year’s ses­sion.

“It’s just great news for Mary­lan­ders,” Middleton said. “It’s a great ex­am­ple of how a po­lit­i­cal sys­tem should re­act.”

“If we hadn’t found the re­sources to keep the rates down, we were go­ing to be left with a sit­u­a­tion where Kaiser and CareFirst could have left the mar­ket al­to­gether,” Middleton said.

Middleton ex­plained that with­out the cost-shar­ing re­duc­tions, many peo­ple were forced to buy their health in­sur­ance out­side of the ex­change, re­duc­ing the size of the risk-shar­ing pool and driv­ing rates up.

An­other con­tribut­ing fac­tor to the po­ten­tial rate in­creases was that most of the peo­ple who would re­main on the ex­change were from higher-risk pop­u­la­tions who re­quire more med­i­cal care and who of­ten seek treat­ment in emer­gency rooms be­cause they can­not af­ford to pay for doc­tor’s vis­its.

This in turn drives up hos­pi­tal costs and in­creases ER wait times.

Middleton said the her­culean task of re­duc­ing rates to keep pa­tients and ul­ti­mately the in­sur­ance providers them­selves from leav­ing the mar­ket­place still rep­re­sented only the first step in sta­bi­liz­ing the Mary­land Health Ben­e­fit Ex­change.

The next step will be to in­crease the pool of healthy peo­ple who par­tic­i­pate in the ex­change. One of the op­tions that leg­is­la­tors are look­ing at is bring­ing small-group health in­sur­ance plans, which busi­nesses use to pro­vide health in­sur­ance cov­er­age to their em­ploy­ees, into the ex­change.

For that to work, how­ever, group and in­di­vid­ual rates would have to be fairly com­pa­ra­ble to pre­vent peo­ple from flee­ing the small-group mar­ket in search of lower rates.

“You’ve got to do this with ex­treme cau­tion be­cause you don’t want to drain the mar­ket,” Middleton said.

The hope is that as the in­sur­ance ex­change grows and sta­bi­lizes, other providers will re­turn to Mary­land, of­fer­ing even more com­pe­ti­tion to fur­ther drive down pre­mi­ums.

When the in­di­vid­ual health in­sur­ance ex­change launched in 2013, eight car­ri­ers of­fered qual­i­fied health and den­tal plans through it. Five years later, only Kaiser and CareFirst re­main.

Middleton, who lost his re-elec­tion bid in the June Demo­cratic pri­mary, said he ex­pects the bi­par­ti­san mo­men­tum to sta­bi­lize the health ben­e­fit ex­change will con­tinue re­gard­less of the out­come of Novem­ber’s gu­ber­na­to­rial elec­tion.

“It would be bad pol­i­tics to try to de­rail what’s go­ing on,” Middleton said. “It’s go­ing to take some very, very level-minded peo­ple, and we have them.”

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