How Did Maryland Drop Their Individual Insurance Premiums by 22 Percent? | Citizens Against Government Waste

How Did Maryland Drop Their Individual Insurance Premiums by 22 Percent?

The WasteWatcher

Citizens who purchased health insurance on the Maryland Health Connection, the Patient Protection and Affordable Care Act (ACA), or Obamacare, marketplace exchange,saw their premiums drop an average of 13 percent in 2019 and will see an average 10 percent decrease starting January 2020.  The 2019 decrease was the first time since ACA was implemented that consumers saw a lower premium. Consumers had been experiencing big hikes year after year since 2014.

Maryland Governor Larry Hogan (R) stated, “By addressing this crisis head-on, we have gone from an individual market on the brink of collapse to two straight years of lower premiums for Marylanders …  Last year, after we refused to accept Washington’s failure to act, we came together to deliver lower rates for the first time in more than a decade.  Our innovative program to make healthcare more affordable for Marylanders serves as a model for the rest of the nation.”

What changed everything was a new reinsurance program Maryland implemented that allowed the state to protect and financially help citizens with pre-existing conditions purchase health insurance in the marketplace and at the same time lower premiums in the exchange. 

And, not all of Washington has failed in delivering lower healthcare costs.  Maryland’s reinsurance program was developed by applying for a Section 1332 State Innovation Waiver.  This provision is found in ACA and the Trump administration provided more flexibility and changes in how to use one.  Citizens Against Government Waste has written about the benefits of these changes before in WasteWatcher, which you can find here and here.

Centers for Medicare and Medicaid Services Administrator Seema Verma, who has spearheaded the changes made to the Section 1332 Waiver, said it enables states to “develop innovative approaches that break away from the otherwise inflexible federal approach and increase consumer control and expand choice and competition in their markets.”

Currently, there are 14 states with Section 1332 Waivers, with 13 of them utilizing the waivers for reinsurance programs.  The states that are using the Section 1332 waiver for reinsurance are Alaska, Colorado, Delaware, Maine, Maryland, Minnesota, Montana, New Jersey, North Dakota, Oregon, Rhode Island, and Wisconsin.  (Hawaii has a Waiver for a Small Business Health Options Program.)

According to an August 13, 2019 issue paper written by Doug Badger at The Heritage Foundation, the seven states that had a Waiver in place during the 2019 plan year experienced an average premium decrease of 7.48 percent.  Taking a closer look, only one of these states, Oregon, had an average increase in premiums of 7 percent.  The other six states had an average decrease in premiums of 10.7 percent.

The five other states had their Section 1332 Waiver for reinsurance approved in July or August of 2019 and are expecting their premiums to decrease between 5.9 percent to 19.8 percent in 2020.  These states are Colorado, Delaware, Montana, North Dakota, and Rhode Island.

News articles are starting to announce the lower rates.  Montana Commissioner of Securities and Insurance Matt Rosendale said his state’s Blue Cross and Blue Shield premiums will decrease on average 14 percent, PacificSource premiums will decrease on average 13.4 percent, and Montana Health CO-OP will have an average decrease of 11.9 percent.

Unfortunately, Democrats on Capitol Hill want to sabotage the success Section 1332 Waivers have made in lowering premiums thanks to the changes the Trump administration made to make them more flexible and user friendly.  Sen. Mark Warner (D-Va.) has sponsored S.J. Res. 52, a resolution that would remove the Trump administration guidance under the Congressional Review Act.  The Democrats argue they are focused on getting rid of short-term limited-duration health (STLD) health plans, which do not have to follow all of ACA’s expensive mandates.  The administration expanded the use of STLD plans in August 2018 to provide more affordable options to consumers and allows them to be utilized under the Waivers, if a state chooses.  The states must also allow ACA compliant plans to be offered.  However, the resolution attacks all the guidance that has made Section 1332 Waiver successful in lowering premiums for millions of Americans across the country.   

A vote on the resolution must occur by November 12, 2019.  If the resolution should be successful, much of the progress that has been made to lower premiums will come to a screeching halt.

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The WasteWatcher: The Staff Blog of Citizens Against Government Waste