Maryland's Reinsurance Program Gets Federal Approval

Date: September 05, 2018

To rein in the state’s ever-increasing health insurance premiums, several top Maryland legislative leaders—Gov. Larry Hogan, Senate President Thomas V. Mike Miller Jr., and House Speaker Michael E. Busch—created a reinsurance program, and they recently received federal approval to implement the plan.

Under this program, The Baltimore Sun reported, the state will impose a surcharge of about $365 million on insurance companies offering coverage in Maryland. This amount—which is roughly what insurers are saving in federal taxes in 2018 because of a one-time exemption under the new federal tax law—will go into a reinsurance fund that will essentially provide these same insurance companies with insurance against the risk of covering customers who need more costly care. According to state officials, the program is expected to lead to a 30 percent rate reduction and will also save health insurance for about 250,000 state residents who were going to lose coverage.

At this point, the program will run through 2020, but it has the potential to be extended through 2023.

However, this may not be the end of the story. Some legislative leaders still have their eye on a more long-term plan. For example, Maryland Matters reported, Del. Joseline Pena-Melnyk and Sen. Brian J. Feldman introduced a bill last session that would have established a state-level health insurance mandate and this issue could arise again (although the bill never advanced from committee last time).

Additionally, Ben Jealous, the Democratic nominee for governor, is pushing for a single-payer system in the state. “While today’s announcement creates a stopgap for many Marylanders, we still need a long-term plan to bring down healthcare costs for everyone,” he said in a statement following the announcement of the reinsurance program’s federal waiver approval. “That’s why I will bring people together to create a Medicare-for-All system that guarantees high-quality and affordable healthcare to every Marylander, and brings down prescription drug prices, especially for our seniors.”

Related Content: Small Business News | Economy | Maryland

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