- Maryland’s special enrollment period extended through August 15, 2021.
- Enrollment for 2021 reached a record high in Maryland’s exchange.
- UnitedHealthcare rejoined Maryland’s exchange for 2021; existing insurers drop average premiums by nearly 12%
- Maryland enacted legislation in 2020 that calls for the state to study the possibility of a state-based premium subsidy.
- Under Maryland’s new Easy Enrollment Program, 3,700 people had enrolled by mid-July 2020.
- Maryland implemented a reinsurance program that took effect in 2019; federal pass-through funding has thus-far been higher than expected and is covering the full cost of the program.
- Short-term health plans are available in Maryland with initial plan terms of up to three months.
- Enrollment in Maryland’s exchange grew in 2019, 2020, and 2021 (reaching a record high), thanks in large part to reinsurance and the resulting premium reductions.
- CareFirst (HMO and PPO entities), Kaiser, and UnitedHealthcare offering plans in 2021 — plus a look at how insurer participation has changed over time.
- Working group recommended standardized plans, but board has postponed until at least 2021.
Maryland exchange overview
Three insurers – CareFirst BlueCross Blue Shield, Kaiser Permanente and UnitedHealthcare – are offering individual-market health plans for 2021 through the Maryland exchange. Thanks to the state’s reinsurance program, premiums decreased by an average of 13 percent in 2019, by another 10 percent in 2020, and decreased by nearly 12 percent in 2021. Enrollment increased by 2% in 2019, grew again, to nearly 159,000 people, for 2020, and grew again, to a record high of more than 166,000 people for 2021.
Maryland is receiving federal pass-through funding for a reinsurance program designed to lower premiums and stabilize Maryland’s individual market. The state also imposed a 2.75 percent assessment on insurers (including commercial plans and Medicaid managed care plans) in the state as of 2019, to recoup money that would have been assessed under the ACA if Congress had not suspended collection of the fee for 2019 (the federal health insurance tax is being assessed again in 2020, but has been permanently repealed as of 2021). That revenue is being combined with the federal funding to cover the cost of the reinsurance program.
Lawmakers in Maryland also considered a bill that would have established universal health coverage in the state, and a bill in 2018 that would have directed the state to consider the possibility of implementing a Basic Health Program (BHP) as of 2020, to cover residents with income above the eligibility threshold for Medicaid, but not in excess of 200 percent of the poverty level (BHPs are part of the ACA, but are optional for states. Only New York and Minnesota have opted to establish a BHP as of 2018). Both bills were ultimately withdrawn.
The Maryland exchange uses an active purchaser model, which means the exchange negotiates with insurers and determines which plans will be offered for sale (this took effect in 2016; prior to that Maryland had a clearinghouse exchange, which meant any carrier that offered QHPs in the state could sell policies on the exchange). Within the exchange, each insurer is allowed to offer up to four plans at each metal level.
Maryland Health Connection got off to a very rocky start in the fall of 2013, but underwent a complete overhaul in 2014, resulting in a much better user experience during subsequent open enrollment periods. In September 2016, just in time for the fourth open enrollment period, Maryland Health Connection introduced a mobile app for Android and Apple, which allows users to log into their accounts, check eligibility for tax credits, and upload images of required documents, among other functions.
Enrollment for 2021 reaches a record high, and a new COVID-related SEP continues until August 15, 2021
On January 4, 2021, Maryland’s exchange announced the start of a new COVID-related special enrollment period for uninsured Maryland residents. In early February, the state announced an extension to the window through May 15, 2021, and then subsequently extended it again, through August 15. As was the case with the state’s COVID special enrollment period in 2020 (described below), retroactive coverage is available depending on when a person enrolls:
- Enrollments completed March 16–April 15: Coverage starts April 1
- Enrollments completed April 16–May 15: Coverage starts May 1
- Enrollments completed May 16—June 15: Coverage starts June 1
- Enrollments completed June 16—July 15: Coverage starts July 1
- Enrollments completed July 16—August 15: Coverage starts August 1
Although COVID-related enrollment windows are available in 2021 in every state, Maryland is the only state offering retroactive coverage availability during the COVID-related enrollment window.
As is the case in other states, a qualifying event is not necessary in order to enroll in coverage during the COVID-related enrollment period. But Maryland has continued to limit their COVID-related enrollment window to only people who are uninsured, whereas in most of the rest of the country, people who already have coverage are allowed to switch plans during this window, or transition from off-exchange to on-exchange coverage. (This increased flexibility offered in most of the rest of the country is designed to allow people to access the additional premium tax credits made available by the American Rescue Plan.)
Maryland Health Connection had among the most flexible COVID-related special enrollment period rules in the country in 2020. On March 13, 2020, Maryland Health Connection announced a special enrollment period related to the coronavirus pandemic. At the beginning of April, the exchange extended the special enrollment period so that it would run until June 15, and the enrollment window was subsequently extended again to continue until July 15. It ended at that point, but a few weeks later, on August 7, the state announced that the special enrollment period was being reopened, and would continue through December 15, 2020. The special enrollment period allowed uninsured residents to sign up for health coverage through Maryland Health Connection, even if they didn’t have a qualifying event.
The state’s COVID-related special enrollment period overlapped with the general open enrollment period for 2021 health plans (both ended on December 15), but the extension of the COVID-19 special enrollment period ensured that if an uninsured Maryland resident decided to enroll in health coverage early in the open enrollment period, they didn’t have to wait until January 2021 for their coverage to take effect. As noted above, the effective date rules for the state’s COVID-19 special enrollment period are much more generous than normal effective date rules, and retroactive coverage is available depending on when a person enrolls.
By mid-December 2020, about 33,000 people had enrolled in private plans through Maryland’s COVID-19 special enrollment period (plus another 70,000 who had enrolled in Medicaid, although Medicaid enrollment is always open year-round). Total exchange enrollment during open enrollment for 2021 coverage reached 166,038, including renewals and new enrollments, which was a record high for Maryland’s exchange. The exchange noted that although total enrollment was higher than it had ever been, and renewals were also up, new enrollments were lower than last year. This is likely due, however, to the increase in enrollments throughout 2020 via the COVID special enrollment period — those individuals were renewing their coverage for 2021, as opposed to signing up as new enrollees for 2021.
2021 rates and plans: UnitedHealthcare rejoined Maryland exchange; average rates drop by nearly 12%
In May 2020, UnitedHealthcare filed plans to begin offering coverage in Maryland’s exchange for 2021. UnitedHealthcare joins CareFirst BlueCross Blue Shield and Kaiser Permanente in offering exchange plans for Maryland residents. UnitedHealthcare offered coverage in Maryland’s exchange from 2014 through 2016, but exited the exchange at the end of 2016 – as they did in many other states as well. But the insurer rejoined the exchange for 2021, using the name “Optimum Choice,” and offering plans in 14 of Maryland’s 24 counties (Anne Arundel, Baltimore city, Baltimore, Carroll, Charles, Frederick, Howard, Kent, Montgomery, Prince George’s, St. Mary’s, Talbot, Washington, and Wicomico).
With UnitedHealthcare’s entry into those 14 counties, there will only be eight counties with only one participating exchange insurer, down from 13 in 2020 (note that United’s plans will only be available on-exchange for 2021; they will not sell plans outside the exchange).
The three existing insurers in Maryland’s exchange all proposed average rate decreases for 2021, but the average rate decreases that the Maryland Insurance Administration approved in September 2020 were, in most cases, even more significant than the insurers had proposed. The following average rate changes are being implemented for 2021:
- CareFirst Blue Choice (HMO): 11.9 percent decrease (versus a proposed average decrease of just 1.1 percent).
- CareFirst of Maryland Inc. (CFMI) & Group Hospitalization & Medical Services, Inc. (GHMSI): 17.1 percent decrease (versus a proposed average decrease of 12 percent). This is the Blue Preferred PPO.
- Kaiser (HMO): 11 percent decrease (approved as filed).
- UnitedHealthcare: New for 2021 so no applicable rate increase
“Value plans” will continue to be available through Maryland Health Connection, after debuting in 2020. These plans have lower out-of-pocket costs and more coverage for certain services (like office visits) before the deductible is met. In 2020, a third of all exchange enrollees in Maryland selected value plans, and the exchange expects these to continue to be popular in 2021.
The filing details for each company are available here. Overall average rates in the state’s existing individual market are dropping by 11.9 percent, which is a more substantial average rate decrease than we’re seeing in most areas for 2021. And 2021 will be the third year in a row with significant (double-digit) premium decreases in Maryland, thanks in large part to the reinsurance program that Maryland implemented starting in 2019.
According to their rate filing details, none of the existing exchange insurers added a COVID-19 factor to their rate proposals for 2021. UnitedHealthcare’s filing did indicate that to address COVID-19, they plan to charge higher premiums in 2021 than they would otherwise have charged, although the specific amount of the premium attributable to COVID-19 is redacted (the filing notes that the higher premiums would address not just the ongoing testing and treatment costs for COVID-19, but also the uptick in demand for elective health care services that were delayed in 2020 and are expected to be provided in 2021 instead).
For perspective, here’s a look at how average individual market premiums have changed in Maryland in previous years:
- 2015: Average increase of 1 percent. 2014 was the first year that ACA-compliant plans were available. The next year, for 2015 coverage, average rates increased by just 1 percent in Maryland’s exchange. The rates that were set in 2014 were little more than educated guesses, as the entire market had been reformed and previous actuarial processes no longer applied. And for 2015, proposed rates had to be filed in the spring of 2014, when insuers had only a few months of ACA-compliant plan data from which to extrapolate.
- 2016: Average increase of 18.3 percent. As expected, the overall average rate increase was significant for 2016, although that’s primarily because of CareFirst’s approved rate changes, which ranged from 19.8 percent to 26 percent, and their significant market share (in 2015, about 79 percent of exchange enrollees had a plan from one of the CareFirst entities). UnitedHealthcare and Cigna both ended up with price decreases for 2016. Kaiser had proposed a rate increase of just 4.8 percent, but regulators increased the final rate change to ten percent for Kaiser plans. Using the market share numbers as of mid-August, and a CareFirst weighted average increase of 21.1 percent, I calculated a weighted average rate increase of 18.3 percent for 2016 for plans sold through Maryland Health Connection, the state-run exchange.
- 2017: Average increase of 25.2 percent. Average rate increases for 2017 were substantial, ranging from 24 percent for Blue Choice (CareFirst’s HMO) to more than 31 percent for CareFirst’s PPO plans (an average rate increase of 20 percent had been approved for Evergreen, but they ended up not being allowed to sell plans for 2017).
- 2018: Average increase of 43.8 percent. For 2018, Maryland regulators approved an average premium increase of 33 percent. But that didn’t include the cost of cost-sharing reductions (CSR) being added to premiums. In mid-October, the Trump Administration announced that the federal government would stop reimbursing insurers for the cost of CSR. So on October 25, the Maryland Insurance Administration announced that new rates had been approved for on-exchange Silver plans only, with the cost of CSR added to the premiums for those plans (slightly different plans became available off-exchange for people who wanted silver plan benefits and didn’t qualify for premium subsidies). At ACA Signups, Charles Gaba calculated an overall average rate increase of 43.8 percent after the new silver plan rates were taken into account.
- 2019: Average decrease of 13 percent. In early/mid-2018, Maryland’s insurers had proposed average rate increases of about 30 percent. But the state was working to create a reinsurance program that summer, and the federal government granted approval for it in late August 2018. Insurers then filed revised rates for 2019; when they were approved, the average rate change for 2019 was about a 13 percent decrease. The state had expected that the reinsurance program would result in premiums about 30 percent lower than what insurers had previously filed for 2019, but that was a rough projection and the results ended up being even better than expected.In their rate filings, CareFirst noted that they would be reducing benefit richness for 2019 (mostly with higher deductibles and out-of-pocket limits). Their HSA-qualified plan in 2019 is silver instead of bronze (note that this is a trend we could see more often in 2019 and future years, as the out-of-pocket limits for HSA-qualified plans are growing more slowly than the out-of-pocket limits for all plans in general, making HSA-qualified plans increasingly more benefit-rich than average bronze-level plans).Maryland enacted HB1782 in 2018, which limits short-term plans to three months and prohibits their renewal, and also clarifies that association health plans are subject to state regulation. The Trump Administration finalized regulations in 2018 that expand access to association health plans and allow short-term plans to last longer. Both of those changes could result in a sicker risk pool in the ACA-compliant markets in states that don’t take action to limit them. (Short-term plans are medically underwritten, and association health plans can be designed to appeal to healthier enrollees, leaving sicker enrollees in the ACA-compliant risk pool.) But Maryland has taken legislative action to mitigate the otherwise deleterious effect that short-term plans and association health plans would have had on the state’s ACA-compliant market.Each of Maryland’s insurers added a 5 percent load to their 2019 premiums to account for the loss of the individual mandate penalty after the end of 2018 (in other words, premiums would have decreased by another 5 percent in Maryland in 2019 if the individual mandate penalty had remained in effect).
- 2020: Average decrease of 10.3 percent. All of the approved rates were lower than the average rates insurers had initially proposed. The rate decreases ranged from a drop of 1.4 percent for CFMI/GHMSI to a drop of 14.7 percent for CareFirst Blue Choice. CareFirst Blue Choice had the majority of the market share in 2019 (57 percent), so their substantial rate decrease was particularly significant. Maryland regulators noted that the rate drop for 2020 was a result of the ongoing effectiveness of the state’s new reinsurance program.
Legislation enacted to study the possibility of a state-based premium subsidy in Maryland
Maryland enacted legislation (HB196 and SB124) in May 2020 that calls for the state to conduct an actuarial study of a potential state-based premium subsidy. In 2019, Maryland imposed a 2.75 percent assessment on insurers in order to fund the state’s reinsurance program. The assessment drops down to 1 percent from 2020 through 2023, but the new legislation also directs the state to conduct a study on the feasibility of splitting the 1 percent assessment between the reinsurance program and a potential new state-based premium subsidy.
The results of the analysis are due to lawmakers by December 2020. If actuaries determine that the full amount of the assessment is necessary in order to keep the reinsurance program operational, there would not be any recommendation to create a separate premium subsidy. But if the analysis determines that the state has some left over money after funding the reinsurance program, it’s possible that a separate state-based premium subsidy could be created. But either way, the assessment will remain at 1 percent from 2020 through 2023.
Massachusetts and Vermont both have state-based subsidies for certain populations, but those programs pre-date the ACA. In 2020, California became the first state to start offering state-based premium subsidies under newly-enacted legislation. Other states, including Colorado, have tried unsuccessfully to pass legislation to create state-funded premium subsidies. It remains to be seen how Maryland’s legislation will play out, but this is certainly legislation to watch in 2020.
Legislation was also introduced in Maryland to create a universal healthcare commission that would have been tasked with designing a single-payer system for Maryland residents, but it died in committee.
Maryland’s Easy Enrollment Health Insurance Program
In May 2019, Maryland enacted SB802, created the state’s new Easy Enrollment Health Insurance Program. The state had initially considered an individual mandate, since the federal penalty for not having health insurance was being terminated at the end of 2018. But lawmakers eventually decided to see if a voluntary approach, combined with state enrollment assistance, could work instead (the details for the various options the state considered are outlined in this brief).
A workgroup was tasked with sorting out the details of the Easy Enrollment Health Insurance Program, and enrollment under the program began in early 2020, when residents started filing their 2019 tax returns.
The tax returns include a new question (sample return illustrated in this brief) asking if the filer (and spouse/dependents if applicable) had health coverage during the year. There is also a box where the tax filer can authorize the state to share information from the tax return with the Maryland health insurance exchange in order to determine whether the household might be eligible for free or low-cost health insurance.
As of 2016, there were about 360,000 uninsured Maryland residents. The state estimates that about 120,000 of them are eligible for free health coverage, either via Medicaid, CHIP, or a private health plan in the exchange with premium subsidies that cover the entire premium. The estimate is that another 90,000 uninsured residents would be eligible for premium subsidies in the exchange, although the subsidies wouldn’t cover the full cost of any of the available plans.
The idea behind the state’s new Easy Enrollment program is that they can use automation in an effort to insure as many of these people as possible under existing programs and existing eligibility rules. Nationwide, there are a lot of misconceptions about the availability and affordability of health coverage, and Maryland officials are hoping that their new program will help to move past those by taking the guesswork out of it. Residents won’t have to know anything about their own eligibility for financial assistance with health coverage, as the state will handle the details as much as possible.
Residents who are eligible for Medicaid or CHIP (and who allow the exchange to use their tax return) are automatically enrolled. Residents who aren’t eligible for Medicaid or CHIP but who are eligible to enroll in a plan through the exchange (with or without premium subsidies) are notified of their eligibility by the exchange. And crucially, they qualify for a 35-day special enrollment period during which they can sign up for health insurance.
This is important because open enrollment for 2020 health coverage ended before the tax filing season began. So without the easy enrollment program, people wouldn’t have been able to enroll in coverage until the fall of 2020, with a 2021 effective date. Instead, their special enrollment period runs for 35 days after the exchange sends out a notice informing them of their eligibility for coverage (and if applicable, financial assistance).
So each person’s special enrollment period has different dates, since people file their tax returns on different dates and eligibility determinations take varying amounts of time depending on the details. But in general, the idea is to get people enrolled as soon as possible. Under the new special enrollment period, coverage will take effect the first of the month after the enrollment is completed.
Amid the COVID-19 pandemic, the tax filing deadline was extended to July 15 in Maryland (as is the case for federal returns). So the easy enrollment program was also extended through July 15, 2020. A total of 41,000 people checked the box on their tax returns during the 2020 tax filing season, and 3,700 of them had enrolled in coverage as of July 13. That number likely grew in August, as people have 35 days to enroll after finding out their eligibility for coverage and subsidies.
2021 enrollment, and a look at Maryland Health Connection’s enrollment in previous years
Thanks in large part to the state’s new reinsurance program (details below), premiums declined in Maryland’s individual market in 2019, 2020, and again in 2021, and enrollment increased in all three years, reaching a record high in 2021.
The year-over-year increase in enrollment came despite the fact that Maryland Health Connection was one of just two state-run exchanges that didn’t extend the enrollment deadline for 2019, 2020, or 2021 coverage. Open enrollment in Maryland ran from November 1 through December 15 in each of those years, mirroring the schedule used by HealthCare.gov (ten of the 12 state-run exchanges opted to extend open enrollment for each of those years, but Maryland did not).
For perspective, here’s a look at qualified health plan (QHP) enrollment in previous years through Maryland Health Connection, based on plans purchased during open enrollment (keeping in mind that the duration of open enrollment has fluctuated over the years; it started out at six months and is now just over six weeks):
- more than 166,000 people enrolled for 2021
- 158,934 people enrolled for 2020
- 156,963 people enrolled for 2019
- 153,571 people enrolled for 2018
- 157,832 people enrolled for 2017 (that’s according to the HHS report; Maryland Health Connection reported 157,637 enrollees).
- 162,177 people enrolled for 2016, which was the highest total enrollment Maryland Health Connection has had so far.
- 120,145 people enrolled for 2015 (this grew to 125,535 during the tax-season special enrollment period; people who didn’t know about the ACA’s individual mandate penalty until they filed their 2014 tax return were given a one-time special enrollment period, through April 30, 2015, to sign up for a 2015 plan).
- 63,002 people enrolled for 2014, the first year that the exchanges were operational. Maryland’s exchange had substantial technical difficulties during that first open enrollment. By September 2014, enrollment grew to more than 81,553 people (plust another 376,850 enrolled in Medicaid through the exchange).
Insurer participation in Maryland’s exchange: 2014 through 2021
In 2020, as was the case in 2018 and 2020, plans are available in Maryland’s exchange from CareFirst (including Blue Choice HMO plans and Group Hospitalization and Medical Services Inc. PPO plans) and Kaiser.
As has been the case in most states, there has been some fluctuation over time in terms of insurer participation in Maryland’s exchange (Table 1 in the Maryland exchange presentation section of this document shows a summary of insurer participation and QHP availability from 2014 through 2018).
In 2014, the first year the exchanges were operational, plans were available through Maryland Health Connection from CareFirst (including several subsidiaries), Evergreen Health (an ACA-created CO-OP), UnitedHealthcare, and Kaiser (this amounted to a total of eight licensed entities, counting all the CareFirst companies). The vast majority of those who enrolled in QHPs selected plans offered by one of the CareFirst companies that participated in the marketplace. The CareFirst options captured nearly 94 percent of 2014 enrollees, followed distantly by Kaiser with about 5 percent, Evergreen Health Cooperative with 0.7 percent, and All Savers (part of UnitedHealthcare) with 0.4 percent.
For 2015, Cigna joined the exchange in Maryland. Insurers offered a total of 53 unique individual policies through Maryland Health Connection, and plans for 2015 were available from United Healthcare, Evergreen, Kaiser, three CareFirst companies, and Cigna.
Those same insurers continued to offer plans in the exchange in 2016. By that point, CareFirst’s total market share in the exchange had dropped to 60 percent, and Kaiser’s had grown to 23 percent.
But at the end of 2016, UnitedHealthcare and Evergreen both stopped offering individual market plans in Maryland Health Connection (as noted above, UnitedHealthcare plans to rejoin the exchange as of 2021). Maryland was one of many states where UnitedHealthcare exited the individual market at the end of 2016. And Evergreen Health was not allowed to sell or renew individual market plans for 2017. The CO-OP had tried to become a for-profit carrier as of 2017, but the transition hadn’t been sorted out in time, and the Maryland Insurance Administration announced on December 8, 2016 that Evergreen Health would not sell or renew any individual plans for 2017, on or off the exchange (group plans could continue in force until their regular renewal date). This was because regulators had not yet worked out the details of the transition to a for-profit entity, and Evergreen had not yet received approval from CMS.
So in 2017, plans were available from CareFirst (including the HMO and PPO entities), Kaiser, and Cigna. As of May 2017, they had all planned to continue to offer coverage in 2018, and Evergreen Health had planned to return to the market for 2018.
But then the investors who had planned to acquire Evergreen Health backed out of the deal, and in July 2017, the Maryland Insurance Administration announced that Evergreen Health was prohibited from selling or renewing any insurance plans. The announcement noted that it was anticipated that Evergreen Health would enter receivership, and that happened in July 2017. As a result, Evergreen plans were not available for 2018 coverage. And in June 2017, Cigna withdrew their its filings for 2018 and confirmed that they would not offer plans in the Maryland exchange for 2018 (according to their rate filing, they had projected having only 705 members at the end of 2017, so their exit did not have a significant impact).
So for 2018, and 2019 insurer participation in Maryland’s exchange was limited to CareFirst (including their HMO and PPO entities) and Kaiser. That continued to be the case for 2020, although UnitedHealthcare (Optimum Health) joined the exchange in 2021, offering coverage in 14 counties.
Maryland’s reinsurance program took effect in 2019 and has resulted in lower premiums
In April 2018, Governor Larry Hogan signed legislation that directed the state to seek federal funding for a reinsurance program, designed to reduce premiums in Maryland’s market starting in 2019. The bill directed the state to submit a 1332 waiver proposal to CMS, seeking federal pass-through funding to supplement state funding for the reinsurance program.
Maryland Health Connection’s board voted to proceed with the process of drafting and submitting the reinsurance waiver to CMS, and the draft waiver proposal was published on April 20, 2018, opening up a public comment period and a series of public hearings. The state’s final waiver proposal was submitted to CMS on May 18, and approval was granted on August 22.
As proposed, the reinsurance program covers 80 percent of claims up to $250,000, and the attachment point (the level a claim has to reach in order to trigger the reinsurance) was estimated to be around $20,000.
According to the waiver proposal, premiums in Maryland were expected to be 30 percent lower in 2019 with the reinsurance program in place than they would have been without it, and enrollment in individual market plans was projected to be 5.8 percent higher (because coverage would become more affordable for people who don’t get premium subsidies).
Premiums ended up being 43 percent lower than insurers had proposed, once the reinsurance program was approved. And enrollment in the state’s individual market (on- and off-exchange) ended up being 20 percent higher than actuaries had projected it would have been without reinsurance: 212,149 people, as opposed to a total projected enrollment of 171,526 if the state had not implemented its reinsurance program. 157,000 of those enrollees obtained coverage through Maryland Health Connection, which was a 2 percent increase over 2018’s exchange enrollment. Reinsurance programs are particularly helpful for the off-exchange population, since those enrollees all pay full price for their coverage (premium subsidies aren’t available off-exchange) and the reduction in premiums due to reinsurance helps to make full-price coverage more affordable.
Maryland’s reinsurance program has clearly been even more successful than anticipated. One factor that may have been important: Maryland spent $1 million to advertise the lower premiums that stemmed from the reinsurance program; if people hadn’t been aware of the reduction in premiums, enrollment gains might not have been as significant.
Alaska, Minnesota, and Oregon were already receiving pass-through funding for reinsurance in 2018 (Maryland was one of several states that implemented similar programs for 2019), and the effect on premiums has been significant. The idea is that the reinsurance program reduces premiums for everyone, which results in smaller premium subsidies, since the subsidies don’t have to be as large in order to keep premiums affordable. The 1332 waiver allows the state to receive the federal funding that would otherwise have been spent on larger premium subsidies, and use it instead to fund the reinsurance program (ie, the savings pass through to the state, which is why it’s called pass-through funding).
The state estimated that the reinsurance program would cost $462 million in 2019, which was the highest-cost reinsurance program in the country as of 2019. Funding for the reinsurance program was expected to come from federal pass-through funding, along with a 2.75 percent tax on insurers that was assessed in 2019. But it now appears that the federal pass-through funding will cover the total cost, and the state won’t need to use the assessment funding. In 2019, Maryland received $347 million in pass-through funding from the federal government. And in 2020, the state received $447 million.
The 2.75 percent fee was authorized by SB387/HB1782, and applies to insurers in all state-regulated markets (ie, not just the individual market), including Medicaid managed care insurers, and the revenue generated was expected to be used to cover the state’s portion of the funding for the reinsurance program (the fee does not apply to federally-regulated plans, including Medicare and self-insured plans regulated under ERISA). It’s not clear how the money will be used if it’s not needed to cover reinsurance costs.
[SB387/HB1782 also limits short-term plans to no more than three months in duration, and prevents them from being renewed at the end of the policy term. And it also places restrictions on association health plans, clarifying that association health plans sold in the state will be subject to state regulations.]
The ACA implemented a similar fee at the federal level, although there was a moratorium on the fee in 2017. The fee did apply in 2018, but in January 2018, Congress imposed another moratorium on collection of the fee for 2019. So the idea behind SB387 was to recoup the money that insurers would have otherwise paid if Congress hadn’t suspended the provider fee for 2019. The insurer assessment only applied in 2019 (to replace the federal fee that was suspended for 2019), but it was projected to generate $365 million in 2019, which the state anticipated would be enough to fund three years of the state’s cost for the reinsurance program. And as noted above, it now appears that the state will not need to use those funds for the reinsurance program, as the federal pass-through funding will be adequate to cover the costs of the program.
The ACA implemented a federal reinsurance program, but it was temporary and only lasted until the end of 2016. Maryland also had supplemental reinsurance program in 2015 and 2016, using funds left over from the state’s pre-ACA high-risk pool.
Working group recommended standardized plans, but exchange board has postponed implementation
Throughout 2017, the Maryland Standardized Benefit Design Work Group met nine times, considering whether and how the Maryland exchange should implement standardized benefit designs. Some other states require standardized plan designs (Covered California only allows standardized plans), and HealthCare.gov allowed insurers to offer standardized plans in 2017 and 2018, but has abandoned that practice for 2019.
The working group recommended that bronze, silver, and gold plans in the individual market should be standardized, and this recommendation was included in the state’s draft letter to insurers regarding 2019 coverage, published in December 2017. But the final letter to issuers, published in January 2018, noted that the standardized benefit design issue had been deferred for the time being.
The letter clarified that the exchange board might revisit the issue at the later date, and might call on the working group to reconvene, and this was reiterated in late 2018, in Maryland Health Connection’s proposed plan certification standards for 2020. But the January 2019 exchange board meeting confirmed that the possibility of requiring standardized plans has been postponed until at least 2021.
Legislation introduced (but not passed) to make pregnancy a qualifying event
In February 2016, SB662 was introduced in the Maryland Senate, with eight Democratic sponsors. The legislation would have deemed pregnancy to be a qualifying event. Both on and off the exchange, a pregnant woman would have been eligible to enroll in a health plan “at any time after the commencement of pregnancy, as certified by a healthcare practitioner” and the special enrollment period would remain open throughout the pregnancy.
SB662 did not pass out of committee during the 2016 legislative session, which ended on April 11. Thus far, New York and Connecticut have opted to make pregnancy a qualifying event, but CMS has declined to make pregnancy a qualifying event at the federal level.
A rough start for Maryland Health Connection in year one
When Maryland Health Connection opened its doors in October 2013, things didn’t go well… to put it mildly. The initial rollout of the exchange was a disaster, and Maryland Health Connection ended up scrapping their initial platform and starting over for round two with technology purchased from Connecticut’s exchange. But they had paid Noridian Healthcare Solutions about $73 million to build the website the first time around (other contractors were also paid – the total cost was around $118 million).
The state ended its contract with Noridian in early 2014, and in July 2015, a settlement — avoiding costly and lengthy litigation — was announced that called for Noridian to refund $45 million back to Maryland. The repayment included $20 million initially, and then $5 million annual payments over the next five years.
Maryland Health Connection was criticized for its lack of transparency. News outlets informally complained about inadequate disclosure of website problems, and the Kent County News filed a formal complaint with the state’s Open Meetings Compliance Board. Industry experts, state and federal legislators, and the state comptroller all questioned the mostly closed-door meetings during which exchange officials decided to rebuild the state’s website rather than transition to the federal site.
Overhaul leads to dramatic improvement
After 2014 open enrollment ended, Maryland Health Connection underwent an extensive overhaul. The exchange abandoned its old website technology and replaced it with Connecticut’s proven system, fired contractors, and implemented new call center technology. The overhaul cost about $40 million according to the Washington Post.
On top of the technological improvements, Maryland Health Connection used a staggered start to limit traffic in the first several days of 2015 open enrollment. Consumers were able to browse plans anonymously starting on Nov. 9, six days ahead of the start of open enrollment. This was a major improvement over 2014, when consumers were unable to browse plans until after they had created an account with the exchange. Consumers could sign up for coverage at enrollment fairs beginning on Nov. 15 and through the call center on Nov. 16. Several more days of increasing access were planned. However, with the site running smoothly, the exchange was opened to all users two days earlier than planned.
In 2014, Maryland Health Connection had fewer than 100 call center staff, but they increased that to more than 350 during the second open enrollment period. The website also operated smoothly throughout the 2015 open enrollment period.
Maryland Health Connection History
Maryland was an early adopter of the health insurance marketplace envisioned by the Affordable Care Act (ACA). While many other states waited to see the outcome of the Supreme Court challenge to the ACA, Maryland moved ahead. The Maryland Health Benefit Exchange (MHBE) was signed into law in April 2011, with additional legislation passed in May 2012. The MHBE was later rebranded as the Maryland Health Connection. In December 2012, the Maryland Health Connection was among the first six state-based exchanges to be approved by the federal government.
In 2014 and 2015, Maryland Health Connection allowed people to enroll until the 18th of the month and still get a first of the following month effective date. But that’s no longer the case; the exchange now follows the same schedule as almost all the other states: Enrollments must be completed by the 15th of the month in order to get a first of the following month effective date.
Maryland health insurance exchange links
Maryland Health Connection
Maryland Health Benefit Exchange (MHBE)
Information about exchange planning and development
State Exchange Profile: Maryland
The Henry J. Kaiser Family Foundation overview of Maryland’s progress toward creating a state health insurance exchange.
Health Education and Advocacy Unit, Office of the Attorney General
Serves residents and other consumers who receive health care from a Maryland health care provider or health insurance provider.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.