- CMS has approved Maryland's reinsurance waiver, which uses $800 million — $380 million of which insurance companies would have otherwise paid in taxes before changes to the federal tax code were made — to keep Affordable Care Act rates down in the state.
- Under the plan, insurance companies will pay a one-year state tax. The revenue from that tax will be used to subsidize the most expensive claims from policies on Maryland's health exchange, lowering risk and subsequently reducing premiums on the individual market.
- Maryland's reinsurance plan is being hailed as a bipartisan initiative to mitigate premium increases caused by the elimination of the ACA's individual mandate penalty scheduled for the beginning of next year.
Maryland is the fourth state to secure such a waiver in the past month, following Maine, Wisconsin and New Jersey, the last of which was approved earlier this week. Three others — Alaska, Minnesota and Oregon — had their own reinsurance waivers authorized by the Trump administration last year. These "state innovation waivers," a provision of the ACA, are designed to give states flexibility in getting their constituents insured and can be approved for up to five years before they must be renewed.
While each plan varies from state to state, they all aim to prevent further losses in the individual market caused by the administration's efforts to dismantle the ACA.
Rises in premium rates are chasing enrollees out of the individual market, and the seven states that have introduced reinsurance plans hope to bring them back. State Sen. Thomas Middleton, one of the sponsors of the bill that became the reinsurance waiver, told The Baltimore Sun that the announced elimination of the individual mandate penalty helped jack premium rates up about 50% last year and could potentially raise them another 40% this year.
Premium increases of that level, according to Middleton, could have caused CareFirst BlueCross BlueShield to leave the individual insurance market. About 250,000 people in Maryland have been affected by individual market rates, according to the Maryland Department of Legislative Services.
Congrats to @GovLarryHogan for taking action that will reduce 2019 individual market premiums in @StateMaryland by about 30% compared to where rates would have been without the waiver. https://t.co/lSYeg6gjHY pic.twitter.com/B0fAxjVLzn— Administrator Seema Verma (@SeemaCMS) August 22, 2018
Despite the Trump administration's steady attempts to disassemble the ACA piece by piece after failing to repeal the law entirely, CMS earlier this week announced $8.6 million in State Flexibility Grants that would be allocated to 30 states and the District of Columbia in an effort to help stabilize the ACA exchanges and individual insurance markets.
CMS Administrator Seema Verma said the agency recognizes that "states are in the best position to assess the needs of their consumers and develop innovative measures to ensure access to affordable health coverage." Verma is expected to announce the approval of Maryland's plan as an example of state innovation.