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Maryland health insurance marketplace: history and news of the state’s exchange

Proposed 30% average rate hike, but that will be lower if reinsurance program is approved and implemented

Maryland marketplace highlights and updates

Maryland exchange overview

Maryland has a state-run exchange, Maryland Health Connection. They debuted window shopping for 2018 coverage on October 2, 2017, nearly a month before the start of open enrollment. Maryland’s exchange did the same thing the year before, letting residents window shop for nearly a month before open enrollment began. Two insurers are offering plans in Maryland’s exchange for 2018, although 13 of the 24 counties in Maryland have just one insurer offering exchange plans.

Maryland will seek federal funding for a reinsurance program designed to lower premiums and stabilize Maryland’s individual market starting in 2019. The state is also planning to impose a 2.75 percent assessment on insurers in the state in 2019, to recoup money that would have been assessed under the ACA if Congress had not suspended collection of the fee for 2019. That revenue will be 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 Both bills were ultimately withdrawn.

Maryland insurers must file rates for 2019 plans by May 1, 2018. The Maryland exchange uses an active purchaser model, which means the exchange negotiates with insurers and determines which plans will be offered for sale. 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.

Proposed 2019 rates much higher, in part due to elimination of individual mandate penalty. But they don’t account for reinsurance; insurers will file new rates if reinsurance program is approved

On May 7, 2018, the Maryland Insurance Administration published the average rate increases that Maryland insurers have proposed for 2019. It’s important to understand that these proposed rate increases do not account for the reinsurance program that the state is working to develop. Maryland will submit a proposal to the federal government later in May, seeking federal funding for a reinsurance program (described below).

If that’s approved, insurers will refile rates, which will be lower than the currently proposed rates. The state expects that the reinsurance program will result in premiums that will be 30 percent lower than what insurers have thus-far filed for 2019, but that’s a rough projection and insurers have not yet filed rates based on a reinsurance program being in place.

But for the time being, here’s what insurers in Maryland have proposed in terms of 2019 average rate increases:

  • CareFirst Blue Choice (HMO): 18.5 percent (58 percent of the market share in 2018)
  • CareFirst of Maryland  Inc. (CFMI) & Group Hospitalization and Medical Services, Inc. (GHMSI) (PPO, two separate entities): 91.4 percent (combined 7 percent of the market share in 2018)
  • Kaiser (HMO): 37.4 percent (35 percent of the market share in 2018).

Rate filing details, including actuarial justifications, are available here.

Overall, the average proposed rate increase is 30.2 percent. But again, that does not include the impact of the reinsurance program that the state is working to implement. If reinsurance is implemented, the rate hikes will be less severe

In their rate filings, CareFirst noted that they are reducing benefit richness for 2018 (mostly with higher deductibles and out-of-pocket limits). Their HSA-qualified plan in 2019 will be 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 is working to expand access to short-term plans and association health plans, which, if finalized, will result in a sicker risk pool in the ACA-compliant markets in many states (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 CareFirst Blue Choice expects Maryland’s new legislation to mitigate the otherwise deleterious effect that short-term plans and association health plans would have had on the state’s ACA-compliant market. CareFirst Blue Choice assumed a 5 percent “morbidity deterioration” in 2019 due to the elimination of the individual mandate penalty, and clarified that:

“The 5% factor is on the low end of the CBO and Oliver Wyman estimates of 5-10%. The reason we have used the lower end is because the high end assumes active short term duration plans and associate health plans driving anti-selection in the individual market. Due to recent legislation passed in MD, we believe these risks are mitigated and so we use the lower number.”

Kaiser’s filing notes that they expect the elimination of the ACA’s individual mandate penalty after the end of 2018 to have “a significant impact, driving a large reduction in membership.” And they note that they expect sicker people to remain insured, while healthier people will be more likely to drop their coverage, leading to increased morbidity in the risk pool. Kaiser projects 82 percent retention for 2019, which they note is lower than previous years. However, they’re also anticipating about 6,110 new enrollees, due to increasingly competitive premiums in 2019. In all, Kaiser expects 66,584 members in 2019, down from 73,704 in February 2018.

CareFirst’s PPO entities (CFMI and GHMSI) note in their filings that they “have not included a load for the elimination of the Individual mandate as we believe PPO members need the coverage and are less motivated by the Individual mandate than members of BlueChoice.” PPOs tend to have much more adverse selection than HMOs, as people who are sicker are more likely to be willing to pay more to have access to the network flexibility that PPOs offer, and the fact that they pay at least a portion of out-of-network charges. Healthy people, however, are unlikely to pay the extra premiums necessary to upgrade to a PPO from more restrictive (but cheaper) EPOs and HMOs.

Public comment period open for reinsurance waiver proposal; will be submitted to CMS by May 20, 2018

In April 2018, Larry Hogan signed legislation that directs the state to seek federal funding for a reinsurance program, designed to reduce premiums in Maryland’s market starting in 2019. The bill directs the state to submit a 1332 waiver proposal to CMS as soon as possible, but no later than July 1, 2018, seeking federal pass-through funding to supplement state funding for the reinsurance program (state regulators have said the proposal will be submitted to CSM on May 20, 2018).

Maryland Health Connection’s board voted on April 16 to proceed with the process of drafting and submitting the reinsurance waiver to CMS, and the draft waiver proposal was published on April 20, opening up a public comment period and a series of public hearings. The state estimates that the reinsurance program will cost $462 million in 2019. Funding for the reinsurance program will come from a 2.75 percent assessment on insurers (authorized by additional Maryland legislation enacted in 2018, discussed below), and federal pass-through funding.

Alaska, Minnesota, and Oregon are already receiving pass-through funding for reinsurance, 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. In Maryland’s case, the federal savings is projected to be $280 million in 2019. The other $182 million needed for the reinsurance program would come from the assessment on insurers, which is projected to generate $365 million in 2019 (more than enough for the reinsurance program, but the assessment funds will also be used to provide a state-based premium subsidy).

According to the draft waiver proposal, premiums in Maryland will be 30 percent lower in 2019 with the reinsurance program in place than they would be without it, and that enrollment in individual market plans will be 5.8 percent higher (because coverage will become more affordable for people who don’t get premium subsidies). The proposed reinsurance program would cover 80 percent of claims up to $250,000, although the attachment point (the level a claim has to reach in order to trigger the reinsurance) hasn’t been specified yet.

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.

Lawmakers pass bill to generate $380 million with a 2019 tax on insurers

In April 2018, Gov. Hogan also signed SB387/HB1782 which will implement a 2.75 percent tax on insurers in the state in 2019. The fee will apply to insurers in all markets (ie, not just the individual market), including Medicaid managed care insurers, and will be used, in part, to provide the state’s portion of the funding for the reinsurance program. The ACA implemented a similar fee at the federal level, although there was a moratorium on the fee in 2017. The fee does apply in 2018, but in January 2018, Congress imposed another moratorium on collection of the fee for 2019. So the idea behind SB387 is to recoup the money that insurers would have otherwise paid if Congress hadn’t suspended the provider fee for 2019.

The measure is expected to generate $380 million ($365 million, according to the state’s draft 1332 waiver) for the Maryland Health Benefit Exchange fund. The money will be used to lower premiums, but it’s only a temporary fix, described as “a Band-Aid” by Senator Thomas Middleton, who sponsored the legislation.

Using the money generated from the insurer fee, the exchange will establish and oversee a “health care access program” that will be “designed to mitigate the impact of high-risk individuals on rates for health benefit plans in the individual market in the state, both inside and outside the exchange.” The money will be used to provide reinsurance and additional premium subsidies, contingent on approval of a 1332 waiver from the federal government.

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. The federal government has proposed regulatory reforms that would return to the definition of short-term plans that was used before 2017 (ie, a plan that lasts no more than 364 days). But states can implement more restrictive rules. State-based restrictions on short-term plans will be especially important starting in 2019, when there will no longer be a federal individual mandate penalty for people who rely on short-term insurance.

SB387/HB1782 also places restrictions on association health plans (which the Trump Administration is working to expand), clarifying that association health plans sold in the state will be subject to state regulations.

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 proposed abandoning 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 clarifies that the exchange board might revisit the issue at the later date, and might call on the working group to reconvene.

2018 enrollment down about 2.6% from 2017

Open enrollment for 2018 coverage was originally scheduled to run for three months, but HHS changed that in the spring of 2017, shortening the enrollment window to just over six weeks. The 12 state-run exchanges that operate their own enrollment platform had an opportunity to extend open enrollment, and ten of them did so.

Maryland initially did not extend open enrollment, but announced in mid-December that open enrollment would continue until December 22. (The other nine state-run exchanges that extended open enrollment all announced their extensions well in advance of open enrollment.) All plans selected during open enrollment, including during the week-long extension, took effect January 1, 2018.

By the end of open enrollment, 153,571 people had signed up for 2018 coverage through Maryland Health Connection. That was down about 2.6 percent from 2017’s enrollment, but open enrollment was significantly shorter for 2018 coverage, ending on December 22 instead of January 31.

Cigna exited, Evergreen Health did not rejoin the exchange

May 1, 2017 was the rate filing deadline for insurers planning to offer individual and small-group plans in Maryland in 2018, both on and off the exchange.

On May 4, the Maryland Insurance Administration published the requested rate increases. At that point, the administration confirmed that five insurers were planning to offer coverage in the exchange in 2018, including Evergreen Health. (Evergreen plans were not available for 2017, but they intended to return to the market for 2018. See details below.) But that was assuming the proposed acquisition of Evergreen Health was approved and finalized.

Ultimately, however, the investors planning to acquire Evergreen Health backed out of the deal, and in late July, 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 on July 31. As a result, Evergreen plans were not available for 2018 coverage.

In June 2017, Cigna withdrew their its filings for 2018 and confirmed that they would not offer plans in the Maryland exchange for 2018. But 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.

Evergreen’s withdrawn filings had no impact on the individual market, as they only had employer-sponsored plans in 2017; all of their previous individual market plans ended at the end of 2016.

So although CareFirst, CareFirst Blue Choice, and Kaiser are the only insurers offering individual coverage in the Maryland exchange for 2018, this did not change much of anything for most enrollees, as the vast majority already had coverage via one of those insurers.

Cigna members were NOT auto-enrolled into new plans, but did have a special enrollment period

For 2017, the federally run exchange started automatically mapping enrollees to new plans if their current insurer was leaving the market and the enrollee didn’t return to the exchange to select a new plan during open enrollment. That system was still in use for 2018 in the federally run exchange. But as was the case for 2017, state-run exchanges are not required to use the same protocol.

Maryland Health Connection confirmed that they were NOT mapping Cigna enrollees to new plans for 2018. Instead, Cigna enrollees received notifications from both Cigna and the exchange, letting them know that they needed to select a new plan during open enrollment (as noted above, there were very few Cigna enrollees in the Maryland exchange, so this was not a widespread issue).

A special enrollment period (SEP) triggered by loss of coverage applied to all Cigna enrollees in Maryland Health Connection, as their plans ended on December 31, 2017. The special enrollment period began 60 days prior to the end of December (so at the same time as general open enrollment) and continued for 60 days after the end of December, ending on March 1, 2018.

The effective date rules during a loss of coverage SEP are different from the normal effective date rules. So a person who was losing coverage under a Cigna plan in Maryland’s exchange had until December 31, 2017 to pick a new plan and have it take effect January 1. Cigna enrollees who did not pick a new plan by December 31 were uninsured as of January 1. They were still be able to pick a new plan until March 1, but could not get a January effective date if they enrolled after December 31.

Remaining insurers: 33% average rate increase approved in August, but cost of CSR was later added to Silver plans

The three remaining insurers filed rates and plans for 2018 in early May (CareFirst and CareFirst Blue Choice are considered two separate entities, despite sharing a parent company). And in late August, the Maryland Insurance Administration announced that they had completed the rate review process, finalizing rates that were lower than the insurers had proposed. The average proposed rate increase for the individual market was 43.1 percent, and the final approved average rate increase was 33 percent; regulators reduced the proposed rate increase by about 23 percent during the rate review process.

New rates were later finalized in October for Silver plans (details below), but the following average rate increases had been approved by Maryland regulators in late August:

  • CareFirst Blue Choice (HMO): 34.5 percent average approved rate increase (versus the 50.4 percent average rate increase that CareFirst Blue Choice proposed)
  • CareFirst of Maryland/Group Hospitalization and Medical Services, Inc. (PPO): 49.9 percent average approved rate increase (versus the 58.8 percent average rate increase the CareFirst proposed)
  • Cigna (PPO): 37.26 percent
  • Evergreen Health (HMO): 27.8 percent (Evergreen only has plans in the employer-sponsored market in 2017, but was planning to re-enter the individual market in 2018 following acquisition by two Maryland medical systems and a private investor group; that deal fell through in late July, however, and Evergreen plans will not be available for 2018).
  • Kaiser (HMO): 22.6 percent average approved rate increase (Kaiser had initially proposed an 18.8 percent average rate increase, but later revised that to 23.36 percent; the approved average rate increase was higher than their initial filing, but lower than their revised filing). Kaiser’s plans are only available in the DC suburbs and the Baltimore area.

But the Maryland Insurance Administration noted that the approved rate increases for the individual market “do not include any factor based upon the political uncertainty of future cost-sharing reduction payments.” That was significant, as we didn’t yet know at that point (late August) whether the Trump Administration would continue to fund cost-sharing reductions (CSR), but we knew that if they didn’t, the cost of CSR would have to be added to premiums.

CSR benefits have to be provided to eligible enrollees, regardless of whether the federal government funds the program or not. And in mid-October, the Trump Administration announced that CSR funding would end immediately. By that point, many states had already approved 2018 rates that were based on the assumption that CSR funding would end. But states like Maryland — where the approved rates had been based on the assumption that CSR funding would continue — had to scramble to implement a solution.

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. This is the strategy that protects the majority of consumers, since premium subsidies are based on the cost of the second-lowest-cost Silver plan, and will rise to accommodate the higher Silver-plan prices (and in turn, can be used to cover even more of the premium for people who choose non-Silver plans that don’t have the extra cost of CSR added to their premiums).

The following average rate increases were approved for on-exchange Silver plans to account for adding the cost of CSR to the premiums (for the remaining plans, the average rate increases approved in August are still applicable):

  • CareFirst Blue Choice (HMO): 58.2 percent (versus the 60.1 percent average rate increase that CareFirst Blue Choice had proposed for on-exchange Silver plans)
  • CareFirst of Maryland/Group Hospitalization and Medical Services, Inc. (PPO): 76 percent (versus the 86.1 percent average rate increase that GHMSI had proposed for on-exchange Silver plans)
  • Kaiser (HMO): 43.4 percent (Kaiser initially proposed a 33.3 percent increase for these plans, but subsequently revised it higher to account for the expected migration of unsubsidized enrollees away from on-exchange Silver plans, since the price of those plans will be sharply higher. Maryland regulators noted that in Kaiser’s service area, Kaiser has the second-lowest-cost Silver plan, so premium subsidies will be higher with the revised Kaiser Silver plan rates than they would otherwise have been, and this will apply to everyone who receives premium subsidies, regardless of what metal level plan they select).

Insurers in Maryland are offering their off-exchange Silver plans (with slightly different benefits) without the cost of CSR added to the premiums, so people who wanted a Silver plan but who don’t qualify for premium subsidies were able to purchase an off-exchange plan without having to shoulder the cost of CSR. Ultimately, most of the additional cost of CSR in Maryland should end up being paid by the federal government in 2018, in the form of larger premium subsidies.

So although the average rate increase for 2018 was steep — especially for Silver plans in the exchange — it’s important to keep in mind that this is calculated before any premium subsidies are applied. 76 percent of Maryland exchange enrollees were receiving premium subsidies in 2017, and those subsidies are designed to grow to keep pace with the cost of coverage in each area. In fact, due to a slight reduction in the percentage of income that people have to pay for the second-lowest-cost Silver plan in 2018, an enrollee could potentially end up with slightly lower after-subsidy premiums in 2018.

The second-lowest-cost Silver plan can be a different plan from one year to the next, and it’s essential for enrollees to always compare all of the available options during open enrollment. But for the majority of Maryland exchange enrollees, premium subsidies will offset all or most of the rate increases that will apply in 2018.

In the small group market, rates are much more stable, with an approved average increase of just 1.7 percent for 2018 (versus the 4.2 percent average increase that insurers proposed).

Evergreen Health CO-OP: No individual plans available for 2017, attempted to become for-profit insurer but deal fell through. Now in receivership

Evergreen Health is one of the CO-OPs created by the ACA, and covered about 38,000 people in Maryland in 2016. There were 23 CO-OPs offering coverage across the country at the start of 2014, but at the start of the 2017 open enrollment period, only six were offering plans for 2017, including Evergreen. At that point, it was to be a for-profit carrier in 2017, rather than a CO-OP (details below), but the transition had not yet been approved by the federal government, and although Evergreen’s plans were listed on the exchange site, they couldn’t be purchased (off-exchange Evergreen plans for 2017 were available for purchase however)

But more than five weeks after the start of open enrollment for 2017 coverage, 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.

People who had already selected and paid premiums for a 2017 individual plan outside the exchange for 2017 were refunded their premium payments, and needed to select a plan from another carrier instead. For exchange enrollees with individual market Evergreen coverage, Maryland Health Connection automatically enrolled them in the most similar plan from another carrier if they didn’t return to the exchange to pick their own new plan. Enrollees with off-exchange coverage had to pick their own new plan or they became uninsured as of January 1. All Evergreen enrollees with individual coverage had until December 31, 2017 to make a new plan selection and have the coverage take effect January 1, as loss of coverage is a qualifying event that has special effective date rules.

A few months earlier, Evergreen had announced that they were being purchased by “a consortium of private investors” and would be converted to a for-profit insurance company. The CO-OP didn’t say who those private investors were at the time, but a deal was reached with the federal government in January that would have involved Evergreen Health paying back $3.2 million of their $65 million federal start-up loan, allowing the insurer to be released from the CO-OP program in order to move forward with the transition to a for-profit insurer.

On May 1, 2017, the Maryland Insurance Administration announced the identities of the three entities that had applied for approval to purchase Evergreen Health:

  • JARS Health Investments, LLC
  • Anne Arundel Health System, Inc.
  • LifeBridge Health (LBH) Evergreen Holdings, LLC

JARS Health Investments is a private investor group. Ann Arundel Health System and LBH are both regional medical systems in Maryland. Their plan, pending approval by the Maryland Insurance Administration, was to acquire Evergreen Health after its conversion to a for-profit entity. Evergreen Health had 26,000 members in early 2017, all on employer-sponsored plans (their individual market plans could not be sold or renewed for 2017). By late July, membership stood at about 25,000.

Evergreen Health had expressed their intent to re-enter the individual market in Maryland in 2018, and had filed rates and plans for 2018 coverage — although this was pending regulatory approval of their acquisition. The Maryland Insurance Administration confirmed in May that individual market Evergreen Health plans would be available through Maryland Health Connection in 2018 if the acquisition was approved — and it was approved, in mid-June.

However, as noted above, the investors notified the Insurance Administration on July 24 that they were terminating the acquisition. At that point, the precarious financial situation at Evergreen Health forced the Maryland Insurance Administration to issue an order preventing Evergreen Health from selling or renewing any plans, and the order noted that it was “a preliminary step to an anticipated receivership.” Shortly thereafter, on July 31, the CO-OP was placed in receivership. As a result, Evergreen Health plans will not be available for purchase for 2018.

Evergreen Health was one of only a few CO-OPs turning a profit by early 2016, but the risk adjustment payments that HHS announced in June 2016 ultimately forced the CO-OP to work out the transition to for-profit status. Evergreen owed the feds $24 million under the risk adjustment program for 2015 — funds that were to then be distributed to CareFirst BCBS. Evergreen had previously filed a lawsuit against HHS to block the collection of the funds, arguing that the program was benefiting older, established carriers, while harming smaller start-ups like Evergreen.

2017 enrollment

Overall, as a result of the ACA, 278,000 people in Maryland gained health insurance from 2010 to 2015, according to an HHS report published in December 2016.

157,832 people selected private plans for 2017 through Maryland Health Connection during open enrollment for 2017 (that’s according to the HHS report; Maryland Health Connection reported a slightly lower total of 157,637). Enrollment for 2017 was slightly lower than the 162,177 people who enrolled during the 2016 open enrollment period.

The average pre-subsidy premium in the Maryland exchange is $431/month (for comparison, the average is $476/month in states that use the federally-run exchange rather than a state-based exchange). But 75 percent of the Maryland residents who enrolled for 2017 are receiving premium subsidies, and after-subsidy premiums average $214/month; subsidies cover a little more than half the cost.

The exchange reported on February 1 that 342,542 Maryland residents had enrolled in Medicaid through Maryland Health Connection since November 1, 2016. Total Medicaid enrollment in Maryland at that point was about 1.3 million; 274,159 of them were eligible as a result of the ACA’s expansion of Medicaid.

51,218 people enrolled in dental coverage through Maryland Health Connection during the 2017 open enrollment period, including stand-alone dental plans and dental plans sold in conjunction with medical plans.

2017 rates and carriers

Maryland is one of many states where UnitedHealthcare exited the individual market at the end of 2016. And Evergreen Health is not selling or renewing individual market plans for 2017 (details below).

The remaining carriers that offered plans through Maryland Health Connection in 2016 are continuing to do so in 2017, with the following average rate increases:

  • CareFirst Blue Choice (HMO): 23.7 percent
  • CareFirst Blue Cross Blue Shield (Group Hospitalization and Medical Services): 31.4 percent
  • Cigna: 29.8 percent
  • Kaiser Permanente: 26.6 percent

CareFirst had 68 percent of the individual market in Maryland in 2016.

Since rates increased by an average of at least 20 percent for all of the carriers that offer plans in the Maryland exchange, subsidies grew as well, to offset the rate hikes. It was important for enrollees to shop around during open enrollment, but for those who are eligible for subsidies, the net premium changes were much more muted than the overall pre-subsidy rate hikes.

In May 2016, Maryland Health Connection announced that there were still about 240,000 people in the state who were eligible to purchase coverage through the exchange (not including those eligible for Medicaid). Three years before, that number stood at 405,000.

2016 open enrollment

Maryland Health Connection enabled online browsing for 2016 plans a month ahead of the start of open enrollment. In the first nine days of open enrollment for 2016, Maryland Health Connection reported that 89 percent of their enrollees who had already returned to the exchange to actively renew their coverage for 2016 had switched to a different plan rather than keeping their existing coverage for 2016.

This was not unexpected, given CareFirst’s market share (78 percent of the exchange market as of August) and rate increase (more than 21 percent), combined with the fact that two other exchange carriers in Maryland offered lower prices in 2016 than they had in 2015. However, when 2017 rate requests were filed in the spring of 2016, CareFirst Blue Choice still had the majority of the individual market.

Nationwide, open enrollment for 2016 ended on January 31. But Maryland Health Connection allowed people who began the enrollment process by January 31 to finish by February 5 if they were unable to finish on time due to the snowstorm that struck the area.

By February 1, 162,177 people enrolled in health plans (QHPs) through the exchange, including 51,195 enrollees who were new to the exchange for 2016. But there are always some enrollees who don’t pay their initial premiums, or who cancel their coverage for one reason or another (this has always been the case in the individual market, and is not new with the ACA). By March 31, effectuated enrollment stood at 135,208.

For perspective, 120,617 people had in-force coverage through the exchange as of October 2015, and compared with enrollment at the end of the 2015 open enrollment period, 2016’s enrollment (as of February 5) represented a 35 percent increase – the third highest percentage increase in the country, and a sign that Maryland Health Connection has moved well beyond their initial rocky start in 2013/2014.

Including Medicaid coverage, more than 500,000 people enrolled in health coverage through Maryland Health Connection between November 1, 2015 and February 5, 2016. Medicaid enrollment continues year-round, and the Medicaid enrollment total during open enrollment (362,415) includes people who renewed their existing Medicaid coverage, as well as new enrollees.

A total of 30,313 people had enrolled in dental plans through Maryland Health Connection by February 5, including people who bought stand-alone dental on its own, as well as people who purchased dental coverage in addition to health coverage. 2016 is the first year that dental plans have been available through the exchange in Maryland.

According to Kaiser Family Foundation data, there were still 336,000 uninsured residents in Maryland in 2015. About 40 percent of them were eligible for Medicaid, and 13 percent were eligible for premium tax credits in the exchange. Of the people who enrolled in private plans through Maryland Health Connection for 2016, 90 percent were eligible for premium subsidies.

Until open enrollment begins again on November 1 – for coverage effective in 2017 – enrollment will only be possible for people who have a qualifying event (this is true both on and off-exchange). However, Native Americans can enroll year-round, as can anyone eligible for Medicaid or CHIP.

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 be 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 has opted to make pregnancy a qualifying event, but CMS has declined to make pregnancy a qualifying event at the federal level.

2016 rates and carriers

On September 4, 2015, the Maryland Insurance Administration announced approved rates for 2016. As expected, the overall average rate increase was significant, 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 CareFirst Blue Choice, CareFirst of Maryland, or Group Hospitalization and Medical Services, Inc., which is also a CareFirst carrier).

United (including All-Savers) and Cigna both ended up with price decreases for 2016, as they had proposed. 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 (some sources say 24 percent, but that appears to be an unweighted average, since the CareFirst HMO has the majority of the carrier’s enrollees and will be increasing in price by 19.8 percent), I calculated a weighted average rate increase of 18.3 percent for plans sold through Maryland Health Connection, the state-run exchange.

At ACAsignups, Charles Gaba calculated the weighted average rate increase in Maryland including off-exchange plans, and came up with about 20 percent. Carriers had proposed a weighted average rate hike of 25 percent, so the Maryland Insurance Administration did trim the rates before approving them.

Not surprisingly, CareFirst’s rate proposals were met with criticism and skepticism. Despite the fact that regulators approved final rates lower than CareFirst had proposed, consumer groups were not pleased that the rates ended up as high as they did. This was the second year in a row that CareFirst requested rate hikes as high as 30 percent, although regulators reduced the final rates for 2015 plans much more significantly than they did for 2016 plans.

For most enrollees, subsidies mitigate the impact of the rate hikes… if they shopped around during open enrollment, which ended January 31. If the benchmark plan (second-lowest-cost Silver plan) has a higher premium in 2016 than it did in 2015, subsidies in that area have increased for everyone receiving them. But it was essential for enrollees to shop around to see which plan offered the best value in 2016, since there was significant disparity among the plans in terms of price changes for 2016.

In the early days of the 2016 open enrollment period, it did appear that people were indeed shopping around, as 89 percent of private plan renewals in the first nine days of open enrollment included a plan change.

Exchange transferring calls to brokers

Maryland Health Connection ran a pilot program during the 2016 open enrollment period, transferring calls to brokers who could assist consumers with the enrollment process once the exchange had determined their eligibility for financial assistance.

The program aimed to reduce Maryland Health Connection’s call-center hold times and allow consumers to receive plan selection advice, which only licensed agents/brokers can provide (navigators and enrollment assisters are not licensed insurance producers, so they cannot provide plan recommendations). The pilot program included 25 brokers during the 2016 open enrollment period, but if is ultimately deemed a success, the exchange was planning to expand the program in 2016 and include additional brokers for the 2017 open enrollment period that began in November 2016.

Small business exchange fully functional, rates stable

Maryland launched its Small Business Health Options (SHOP) exchange in April 2014, but the employee choice option only became available in August 2015. Six carriers offered plans through Maryland Health Connection’s small business exchange in 2015, and in good news for small employers, the small group market experienced an average rate decrease of 1.8 percent in 2016.

For 2017, small business rates in Maryland are increasing by an average of just 3.3 percent.

Employers can select from two “choice” options (prior to the summer of 2015, employee choice was not available):

  • In the Employer Choice Option, the employer picks one insurance company on the SHOP, and employees can choose any plan offered by that insurer.
  • In the Employee Choice Option, the employer picks the metal level that will be open to employees. Employees can then choose a plan at that metal level from any insurer on the exchange.

Eligible small employers (up to 25 employees) can qualify for a two-year tax credit to help offset the cost of purchasing coverage in the SHOP exchange, depending on their employees’ average salaries.

Enrollment deadline the 15th of the month

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.

Exchange recouping $45 million from Noridian

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 was announced that calls for Noridian to refund $45 million back to Maryland. The repayment includes $20 million initially, and then $5 million annual payments over the next five years. The settlement avoids costly and lengthy litigation – similar to what Oregon and Oracle have been embroiled in for months.

Legislative audit

A Maryland Office of Legislative Audits report published in October 2015 was also critical of Maryland Health Connection. The audit alleged that Maryland Health Connection didn’t adequately verify work done by “vendors, contractors and grass-roots organizations” that worked with the exchange. Of particular concern is the audit’s finding that the exchange provided subsidies that were higher than they should have been (if enrollees receive too much in subsidies, they may have to pay back some or all of it when they file their taxes the following year). The audit also alleged that Maryland Health Connection didn’t do enough to secure enrollees’ personal information.

In November 2015, Maryland Attorney General Brian E. Frosh indicated that other vendors in addition to Noridian may bear some of the blame for Maryland Health Connection’s failed launch in 2013. Frosh’s investigation “has revealed that the vendors’ misstatements about their software and the vendors’ poor performance under the contract were the actual and proximate cause of the system’s failed launch” and he urged the legislative investigation to focus on the vendors in addition to the exchange itself.

OIG audit alleges misallocation of costs

In addition to the state audit, the US Office of the Inspector General (OIG) audited Maryland Health Connection’s allocation of costs for 2013 and 2014. The OIG audit concluded that Maryland Health Connection misallocated millions of dollars in federal funding. Since the exchange enrolls people in private health plans as well as Medicaid, they received initial funding from the Center for Consumer Information and Insurance Oversight (CCIIO), as well as from Medicaid.

Because the exchanges were starting something that had never been done before, they had to rely solely on enrollment projections heading into 2014. Maryland Health Connection used an enrollment projection of 58 percent private plans and 42 percent Medicaid. Ultimately, that ended up being slightly off, and was compounded by the fact that the projections were based the calendar year rather than the fiscal year.

The OIG audit determined that the Maryland exchange should give back $28 million to CCIIO, and seek reimbursement from Medicaid. Although the exchange notes that the accounting reconciliation would result in the exchange owing the federal government about $5 million, Maryland Health Connection has maintained that no errors were made, and that they worked closely with CMS throughout the exchange implementation process, receiving approval from CMS for their financial allocations in advance of the OIG audit.

It’s unclear whether Maryland Health Connection will have to comply with the recommendation of the OIG audit. Although the exchange does not believe that any errors were made on their part, they’ve expressed their commitment to “…continuing work with CMS so that funds are appropriately allocated, allowable and reasonable.”

2015 enrollment

By early October 2015, Maryland Health Connection announced that their private plan enrollment stood at 120,617. That was lower than the July (126,346) and August (123,673) enrollment counts, but higher than March (114,559). Attrition is normal part of the individual market, and a gradual decline in enrollment should be expected outside of open enrollment.

The effectuated enrollment total as of March 31 was 114,559, so the exchange enrolled nearly 12,000 people during the second quarter – after open enrollment had ended (qualifying events are necessary to enroll outside of open enrollment). Enrollment got a boost in the spring thanks to the 5,436 people who signed up during the special enrollment period (March 15 to April 30) for people who were uninsured for all or part of 2014 and who found out about the ACA’s individual mandate penalty when they filed their 2014 taxes.

Almost 71 percent of the exchange enrollees (as of June 30) qualified for premium subsidies, and 50 percent were receiving cost-sharing subsidies (only available on Silver plans, for enrollees with household income up to 250 percent of the poverty level).

As during the 2014 open enrollment period, CareFirst dominated the market in 2015. As of August 13, 2015, nearly 96,000 consumers had enrolled with CareFirst, and more than 20,000 had enrolled with Kaiser. The balance of enrollees was shared by three additional carriers: 3,440 had enrolled with Evergreen, 3,383 with United Healthcare (including subsidiary All-Savers), and 698 with Cigna.

Enrollment for Medicaid is open year-round. The exchange announced that as of the end of February, 166,353 people had enrolled in Medicaid coverage through the exchange for 2015. Total Medicaid enrollment in Maryland increased by 36 percent (306,512 people) between the end of 2013 and August 2015, largely due to the fact that Maryland accepted federal funds to expand Medicaid under the ACA.

In 2013, the uninsured rate in Maryland was 12.9 percent, according to Gallup data. By mid-2015, the uninsured rate had dropped to 7 percent.

2015 plans and premiums

For 2015, eight carriers offered individual policies through Maryland Health Connection, with a total of 61 plans available (an increase from 45 in 2014). 2015 plans were available from United Healthcare, All-Savers, Evergreen, Kaiser, three CareFirst companies, and Cigna.

A study issued by the Commonwealth Fund shows that, on average, premiums in Maryland were unchanged from 2014 to 2015. The analysis was weighted to take into account the differences in rates in urban/suburban/rural areas and insurer participation. But for individual carriers, there were significant premium changes for 2015. Three carriers (All-Savers, Evergreen, and Kaiser) had rate reductions, while the three CareFirst plans had rate increases (this includes CareFirst Blue Choice, CareFirst of Maryland, and Group Hospitalization & Medical Services). Cigna and United Healthcare were new to the exchange in 2015.

Difficulties in 2014

Severe technical problems plagued the Maryland Health Connection website in 2014. Some consumers who were unable to sign up for private insurance were temporarily enrolled in the state’s high-risk insurance program, at the state’s expense. Problems with determining who qualifies for Medicaid means the state may make about $20 million in unnecessary payments over two years. Maryland fired its prime contractor, Noridian Healthcare Solutions, and hired Deloitte Consulting to adapt Connecticut’s successful technology for use by Maryland. Consultants put the cost of rebuilding the Maryland Health Connection website at up to $60 million. Officials are still evaluating legal action to recover some of the money paid to Noridian.

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.

In addition, the Maryland Health Benefit exchange, which oversees the marketplace, repeatedly delayed the launch of the Small Business Health Options Program (SHOP). Work on the SHOP website was put on hold in February 2014, and the launch date pushed back.

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, implemented new call center technology, and implemented a staggered launch to the second open enrollment period. 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.

In late 2015, the Maryland Health Connection board of directors was considering new regulations (to be implemented in 2017) requiring carriers to do a better job of keeping their online provider directories updated, as the current directories have an unacceptable number of errors and don’t accurately indicate whether or not providers are accepting new patients. Healthcare.gov instituted similar regulations – effective in 2016 – for carriers that sell plans through the federally-run exchange in 38 states (Maryland has its own exchange and does not use Healthcare.gov).

2014 enrollment recap

Despite all of the problems in 2014, Maryland exceeded its enrollment goal of 260,000. During the six-month open enrollment period, 63,002 people enrolled in private insurance and 232,075 people enrolled in Medicaid. Through September 2014, enrollment grew to more than 458,000 people: 81,553 in private health plans and another 376,850 in Medicaid.

Six insurers offered 45 individual plans through Maryland Health Connection for the 2014 plan year. The vast majority of those who enrolled in QHPs selected plans offered by one of the three CareFirst BlueCross BlueShield 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.

According to a Gallup-Healthways poll, Maryland’s uninsured rate dropped from 12.9 percent in 2013 to 7.8 percent in 2014.

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.

Maryland Health Connection is overseen by a nine-member board. In June 2014, Carolyn Quattrocki was named to a one-year term as executive director of the board. She began serving in that role on an interim basis in December 2013 following the resignation of Rebecca Pearce.

For 2014 and 2015, Maryland Health Connection functioned as a clearinghouse, meaning any carrier that offered QHPs in the state could sell policies on the exchange. In addition, any health plan with significant market share in the state is required to participate in the marketplace, and health plans are limited to selling four benefit packages per metal level (platinum, Gold, Silver, and Bronze).

But starting with the 2016 plan year, the exchange switched to an active purchaser model, which means that the exchange can negotiate with carriers to determine which plans will be offered on the exchange.

Maryland health insurance exchange links

Maryland Health Connection
855-MHC-8572 (855-642-8572)

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.
(877) 261-8807


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.

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