Maryland's new reinsurance program is being credited for a 13.2% average decrease in individual market premiums in 2019.
Before the state received a 1332 State Innovation Waiver from CMS in August to create the program, the four individual health plans in the state requested an average increase of 30.2%, including one at 91.4%. Now, with the program in place, Maryland approved rates with decreases ranging from 7.4% to a 17.4%.
Maryland Gov. Larry Hogan said in a statement that 2019 will be the first year since the Affordable Care Act went into effect that all individual insurance rates will drop.
Maryland is one of seven states that have received the OK from CMS to create reinsurance programs, which are a way states can help payers cover costs that exceed a certain limit. They allow payers to budget for a specific risk, which removes the uncertainty that can lead to higher rates.
CareFirst Blue Choice, which includes 109,000 of the 192,000 members with individual insurance in Maryland, will have the largest decrease (17.4%). The HMO had planned an 18.5% rate increase before the reinsurance program. CareFirst said 2019 will be the first time in more than 20 years it will offer across-the-board rate reductions in Maryland for individual insurance.
"There is no doubt that this is — after years of increases — positive news for those seeking individual coverage in Maryland," CareFirst CEO Brian Pieninck said in a statement. "There's also some additional good news just below the surface of today's headline. Individuals who have purchased PPO plans from CareFirst in the past may be able to buy nearly identical HMO coverage at a substantial, additional savings."
Early today, @GovLarryHogan and @MD_Insurance announced historic rate cuts for Marylanders purchasing individual coverage. CareFirst will offer rate reductions that could help thousands save dramatically on their 2019 coverage. Learn more: https://t.co/vzZuBdqrUh pic.twitter.com/qH51Se6sbe
— CareFirst (@CareFirst) September 21, 2018
Overall, the individual policy renewal rates are 43.4% lower than originally filed and 13.2% lower than 2018's premiums. The reinsurance program is expected to save $406 million in premiums. An actual review by the Maryland Insurance Administration is estimated to save another $75 million in 2019.
Hogan said the lower rates will make Maryland's health insurance "more competitive and dynamic."
Maryland's reinsurance program will reimburse payers for member costs between $20,000 and $250,000, costing the state $462 million next year. The program will be funded through a 2.75% assessment on health plans.
Earlier this month, New Jersey Gov. Phil Murphy announced that his state will see an overall average rate decrease of 9.3% in the individual market next year. Murphy pointed to a combination of a reinsurance program and New Jersey passing its own individual mandate as the reason for the premium cut.
New Jersey's reinsurance program will reimburse 60% of member claims between $40,000 and $215,000 in 2019 and will be funded through the federal government, revenue from the individual mandate and the state's general fund, if necessary.