Why Maryland Needs a Health Insurance Down Payment Plan

Why Maryland Needs a Health Insurance Down Payment Plan

By, Molly Cook, RN (Intern with Maryland Health Care for All! Coalition)

In the 2018 session the Maryland General Assembly and Governor Hogan created a statewide Reinsurance Program to stabilize the individual health insurance market and lower individual premiums. It was commendable and essential, but it was only step one. Step two is the Health Insurance Down Payment Plan. The Down Payment Plan is a popular, cost-effective, and life-saving solution to skyrocketing individual premiums, which was introduced in the 2018 Maryland General Assembly Session by Senator Brian Feldman and Delegate Joseline Peña-Melnyk.  The Reinsurance Program is incomplete without it, and it’s going to be a hot-button issue for 2018 elections as well as the 2019 General Assembly Session.

The statewide Reinsurance Program is insurance for insurance providers. It infuses over $300 million of state and federal money into a fund that will slow the rate of premium increases for Marylanders purchasing coverage from the individual market. Right now, Carefirst and Kaiser Permanente are the only two insurers selling individual coverage in the Maryland Health Connection. Because they are the only two players, there is little competition. Additionally, both providers typically cover populations that need the most care. Reinsurance helps Kaiser and Carefirst keep premiums from skyrocketing because they will not need to rely solely on rising premiums to cover those who tend to need more services.

So, what is a Health Insurance Down Payment Plan? The federal government will not enforce an individual mandate starting in 2019. A mandate encourages young, healthy people into the individual market. Without it, premiums in the individual market will continue to rise in Maryland at twice the rate of inflation. The Down Payment Plan reinstates an individual mandate, but it makes it supportive rather than punitive. At tax time, consumers who did not have quality coverage in the past year will have the option to use money owed in penalties to instead purchase quality, affordable health coverage. The Down Payment Plan also automatically applies federal tax credits and, for people who can enroll into a plan at no additional cost, helps them enroll into that plan quickly. If there isn’t a plan available at no additional cost then their money is kept in an account that can be used to buy coverage after tax time.

Why do we need the Down Payment Plan in addition to the Reinsurance Program? The Down Payment Plan encourages people across the state to retain coverage or gain new coverage. The more people joining in the risk pool, the lower insurors can set premiums. It will also create incentives for more insurance providers to participate in the individual market, which means more competition. A detailed actuarial report projected that combining the Reinsurance Program with the Down Payment Plan would slow premium increases by 50%. Maryland would bring in at least $8 million more from the federal government. Over 30,000 people would be able to keep their insurance. This combination results in the highest number of newly covered people. All of this is possible without spending any additional taxpayer money.

Many of the 219,000 Marylanders who purchase coverage from the Exchange are farmers, realtors, contract employees, and others who are not covered through their employer. Some members of this group qualify for federal subsidies.  If they do not, a silver plan on the Exchange for a family of four already costs $2400 per month with a $7000 deductible. Individuals and families are struggling. They want to see that candidates, incumbent or otherwise, care and have a solution.

The Affordable Care Act has been a huge win for Maryland. Challenges from Washington threaten its success, but we have the power to protect this progress. Governor Hogan and the General Assembly took critical action with the Reinsurance Program. A Health Insurance Down Payment Plan lowers the rate of premium increases, covers more people, and automatically enrolls them in appropriate plans. For the sake of everyone out there purchasing individual coverage from the Exchange, it is necessary to stay the course and enact the Health Insurance Down Payment Plan.