Marylanders in Obamacare individual market poised to see rate drop thanks to reinsurance

Sept. 14--Thousands of Marylanders covered by Obamacare plans purchased on the individual market are likely to see hefty decreases in their 2019 premiums, thanks to legislation the General Assembly adopted this year with bipartisan support.

The two providers active on the insurance exchange for individual plans in the state, CareFirst BlueCross BlueShield and Kaiser Permanente, have told the Maryland Insurance Administration they want to reverse their earlier requests for rate increases averaging about 30 percent.

CareFirst is now proposing a decrease of 22.3 percent and Kaiser a 7.8 percent drop in their health maintenance organization plans. The decreases would affect about 250,000 people in the individual market, in particular the roughly half of them who receive no federal assistance with their premiums.

The declines would follow several years of steady increases in rates on the individual market, which serves people who don't have insurance through their employers.

The change is the result of a reinsurance plan passed by the Democratic-controlled legislature with the support of Republican Gov. Larry Hogan. The legislation was hailed by both parties as an example of bipartisan cooperation to hold down rates in the face of actions by the Republican U.S. Congress and President Donald Trump seeking to dismantle the Affordable Care Act.

"This is exactly the way we envisioned it," said Sen. Thomas M. "Mac" Middleton, Senate sponsor of the reinsurance legislation. "The stars lined up."

"For the first time in memory, insurance providers are proposing to lower rates for consumers, which is incredible progress toward our administration's goal of making health care more affordable for all Marylanders," said Hogan spokesman Amelia Chasse.

The decreases need the approval of the insurance administration, which will hold a hearing Monday on the requests.

Tracy Imm, director of public affairs for the insurance administration, said the regulatory agency must conduct an actuarial analysis and make sure the proposed rates aren't discriminatory. In theory, the agency could deny the decrease, but it could also order deeper cuts.

She said the decision will probably be announced by the end of next week.

A CareFirst spokesman declined to comment and a Kaiser spokesman could not immediately be reached.

The advocacy group Consumer Health First urged Insurance Commissioner Alfred W. Redmer Jr. to make sure the carriers are giving their customers the lowest possible premiums. The organization said the rate proposals can be "deceiving" and that some consumers could end up paying more next year for the same plan they purchased in 2018.

Consumer Health First said CareFirst, in particular, has a large surplus and is expected to receive a $78 million windfall from changes to federal tax law. The group suggested the carriers could lower premiums even more.

In addition to the HMO decrease, CareFirst is proposing a 17.7 percent increase in premium for its Preferred Provider Organization, which gives patients more flexibility in which doctors they can see than an HMO.

The lower HMO rates follow the Trump administration's decision to approve a waiver for Maryland allowing its reinsurance program.

Hogan announced that decision last month, along with House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller. At the time, Busch called the reinsurance bill the most important legislation the legislature passed this year.

Under the plan, the state decided to keep in place a tax on health insurance carriers that Congress eliminated at the federal level.

Middleton, a Charles County Democrat, said CareFirst raised its premiums by about 50 percent this year and was looking at another 40 percent increase next year.

He said the company, Maryland's only statewide carrier, told him it would have had to drop out of the health care exchange.

"That would have been catastrophic," Middleton said.

He said people who lost their plans as a result would have had to turn to emergency rooms for health care, driving up hospital bills for all Marylanders.

Andrew Ratner, spokesman for the Maryland Health Benefits Exchange, said the state tax will produce about $360 million annually for a fund -- bolstered by a federal contribution -- that compensates carriers for the extra costs of insuring less healthy people they cannot exclude under Obamacare. The insurance carriers didn't oppose the tax -- largely because the dollars it generates are cycled back to them and help stabilize the market.

Ratner said the reinsurance scheme is not a permanent fix. He said new funding sources will likely be needed after about two years, even though the federal waiver is good for five.

If the reinsurance plan works as well as expected, Ratner said, any additional costs may be minimized by the the prospect that lower rates will draw in younger, healthier purchasers to a pool with a disproportionate number of people with health problems. In turn, that could draw in additional carriers, Middleton said.

"The more people you have in the pool, the more stability you'll bring to the exchange," he said. "The more people you have in the market, the more competition you have and competition is what drives the efficiencies you need."

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