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

After reinsurance was approved, insurers revised their proposals to reflect an average rate decrease of about 13%

Maryland marketplace highlights and updates

Maryland exchange overview

State legislative efforts to preserve or strengthen provisions of the Affordable Care Act

Maryland is one of the states fighting the hardest to preserve the Affordable Care Act’s gains. See the steps Maryland has taken.

Two insurers – CareFirst BlueCross Blue Shield and Kaiser Permanente – are offering individual-market health plans for 2019 through the Maryland exchange. Thanks to the state’s reinsurance program, premiums decreased by an average of 13.2 percent in 2019, and enrollment increased by 2 percent.

Maryland is receiving federal pass-through funding for a reinsurance program designed to lower premiums and stabilize Maryland’s individual market. The state has also imposed a 2.75 percent assessment on insurers (including commerical plans and Medicaid managed care plans) 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 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 Both bills were ultimately withdrawn.

Maryland insurers had to 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. The proposed rate hikes for 2019 represented average rate increases of about 30 percent, but that was preliminary and did not include the effect of the then-proposed reinsurance program. Ultimately, premiums ended up decreasing by an average of about 13 percent, due to the implementation of the reinsurance program.

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.

Maryland Health Connection is an active purchaser exchange (this has been the case since 2016), which means that the exchange can negotiate with carriers to determine which plans will be offered on the exchange.

2019 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, and enrollment increased. Enrollment via Maryland Health Connection reached 156,963 during the open enrollment period for 2019 coverage, which was a 2.2 percent increase over 2018, when 153,571 people bought plans.

The 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; open enrollment in Maryland ran from November 1, 2018 through December 15, 2018, mirroring the schedule used by (ten of the 12 state-run exchanges opted to extend open enrollment, 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):

  • 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).

Find a short-term health plan in Maryland for as little as $50 a month.

Insurer participation in Maryland’s exchange: 2014 through 2019

In 2019, as was the case in 2018, 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. 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, insurer participation in Maryland’s exchange was limited to CareFirst (including their HMO and PPO entities) and Kaiser. That continues to be the case in 2019.

Maryland’s reinsurance program took effect in 2019

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 as soon as possible, but no later than July 1, 2018, seeking federal pass-through funding to supplement state funding for the reinsurance program.

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’s final waiver proposal was submitted to CMS on May 18, and deemed complete as of early July 2018. 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 is the highest-cost reinsurance program in the country as of 2019. Funding for the reinsurance program comes from federal pass-through funding, along with a 2.75 percent tax on insurers that’s being assessed in 2019.

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 is being 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).

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.

[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.]

In Maryland’s case, the federal savings was initially projected to be $280 million in 2019, although it later increased to $373 million (it remained at roughly the same level once the 2019 funding was finalized by CMS at $373.4 million). The other $89 million (previously estimated at $182 million) needed for the reinsurance program comes from the assessment on insurers. The insurer assessment only applies in 2019 (to replace the federal fee that was suspended for 2019), but it’s projected to generate $365 million in 2019, which the state anticipates will be enough to fund three years of the state’s cost for the reinsurance 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.

2019 average rates 13% lower than 2018 rates, thanks to reinsurance (plus a look at historical rate changes in Maryland)

On May 7, 2018, the Maryland Insurance Administration published the average rate increases that Maryland insurers had proposed for 2019. However, those proposed rate increases did not account for the reinsurance program that the state had proposed to CMS, because it had not yet been approved. Maryland submitted a proposal to the federal government in late May, seeking federal funding for a reinsurance program (described above).

The federal government granted approval in late August, and insurers then filed revised rates, which are available here (click on “filing info” and then the “post-1332” actuarial memos and certifications). The revised rates were considerably lower than the initially proposed rates had been. The state expected that the reinsurance program would result in premiums about 30 percent lower than what insurers had thus-far filed for 2019, but that was a rough projection.

When the rates were approved, the average change for 2019 was about a 13 percent decrease — as opposed to the average 30 percent increase that insurers had initially filed. The approved rates were much closer to what the insurers filed in their revised submissions:

  • CareFirst Blue Choice (HMO): 11.1 percent DECREASE. Prior to the approval of Maryland’s reinsurance program, CareFirst Blue Choice had proposed an 18.5 percent increase. In their revised filing, they had proposed a 22.3 percent decrease. The insurer had 58 percent of the market share in 2018.
  • CareFirst of Maryland  Inc. (CFMI) & Group Hospitalization and Medical Services, Inc. (GHMSI) (PPO, Blue Preferred): 17 percent DECREASE. Prior to the approval of Maryland’s reinsurance program, CFMI and GHMSI had proposed a 91.4 percent average increase. After the reinsurance program was approved, the insurer had proposed a 17.7 percent average increase. CFMI and GHMSI had a combined 7 percent of the market share in 2018.
  • Kaiser (HMO): 7.4 percent DECREASE. Prior to the approval of the reinsurance program, Kaiser had proposed a 37.4 percent average increase. Their revised proposal had called for a 5.67 percent decrease. Kaiser had 35 percent of the market share in 2018.

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 change will 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 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.” Ultimately, 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).

For perspective, here’s a look at how average individual market premiums have changed in Maryland in previous years:

  • 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.
  • 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 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.
  • For 2017, average rate increases were again 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).
  • 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. 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 thus grow 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). Insurers in Maryland began 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.

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 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.

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.

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
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 Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.