The Maryland State Reinsurance Program (SRP) Work Group met last week to provide an overview of the Report on the Impact of the SRP. It states that no changes should be made to the SRP’s design, parameters, and state funding mechanisms. An action plan was considered in preparation of the possibility of Congress allowing the American Rescue Plan Act (ARPA) to sunset at the end of 2025.
In 2022, the Maryland General Assembly passed House Bill 413, which required the Maryland Insurance Administration, in collaboration with the Maryland Health Benefit Exchange and the Maryland Health Care Commission, to report the impact of the SRP to the governor and general assembly on Dec. 1st. The goal of the SRP is to mitigate the premium impact of high-cost enrollees on carriers that participate in the individual market. The fundamental task of the working group is to decide whether there should be any changes to the SRP, according to Maryland Insurance Commissioner Kathleen Birrane.
“The report concludes very strongly that it isn’t broken, and we don’t need to fix it. That the SRP has worked extraordinarily well, that it has achieved all of its initial objectives, and then some. That as a result, Maryland has an extremely stable individual market where we are constantly making incremental beneficial changes in reducing the uninsured population.”
— Birrane
The report stated that the SRP resulted in the reduction of rates in the individual health insurance marketplace by 32 percent in three years, and has since kept rate increases at or under claim trends. The report also found that enrollment rates in the individual health insurance marketplace have rebounded and continue to increase, thus decreasing the rates of those who are uninsured. Additionally, Maryland’s unsubsidized rates for comprehensive quality health insurance within the individual market are among the lowest in the nation.
Birrane discussed the expansion of federal subsidies available to pay for individual health insurance, which was implemented during the COVID-19 pandemic, known as ARPA enhanced subsidies.
“What that did was, for the first time, it allowed middle-income people to be able to take advantage of some element of the subsidy, so by taking away that income qualification, we saw upticks in the number of people who were willing to come in,” Birrane said.
If ARPA sunsets at the end of 2025, higher costs will trickle down to consumers since it would be a drop in federal funding. Since there’s uncertainty about ARPA-enhanced subsidies being extended, Birrane said the SRP fund needs to be safeguarded to maintain the stability of the health insurance marketplace.
Certain Marylanders could see a premium increase by as much as 40 percent if Congress allows ARPA-enhanced subsidies to sunset, which could negatively impact enrollment rates. The report states that Maryland needs to create an action plan to buffer the potential sudden and wholesale elimination of enhanced subsidies to protect and keep the stability of the state-based premium subsidy to offset some or all of the reduction in federal support to maintain enrollment for potentially impacted individuals.
The report identified types of state-based subsidy programs that other states have implemented, although Maryland is unique in having a Young Adult Subsidy Program. The SRP Work Group recommended modifications to move to a per-member/per-month approach, and Birrane said the program has added an incremental benefit on top of the ARPA-enhanced subsidy, although data is still being recorded about what that specific impact has been.
“I think everybody can agree that given the large number of individuals coming out of Medicaid in light of the Medicaid reevaluation process, that the young adult subsidy has been very helpful in making sure those young adults who are transitioning from a Medicaid product into the insurance marketplace are not shocked by amounts that they have to pay,” Birrane said.
The SRP Work Group will accept written comments until Dec. 15th. From there, the group will receive additional feedback from policymakers and potential recommendations.