Maryland’s request to extend its State Innovation Waiver, under section 1332 of the Affordable Care Act, was recently approved by the Centers for Medicare and Medicaid Services (CMS) for another five years. State Innovation Waivers may abandon certain federal requirements in order to improve the health insurance market.
The State Reinsurance Program (SRP) was enacted by the 2018 legislature under House Bill 1795, and was an emergency measure. The goal of SRP is to mitigate the impact of high-cost enrollees on carriers that participate in the individual market. SRP has reduced rates and created brief relief for some residents who have experienced high rate increases on their health insurance premiums.
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SRP reimburses insurers for a portion of their claim costs, and lower costs allow carriers to charge lower premiums. The Maryland Health Benefit Exchange (MHBE) is in charge of submitting SRP parameters. During the public comment period, an anonymous Maryland resident wrote in support of approving the waiver’s extension on June 3rd.
“Maryland is one of the nation’s leaders in healthcare innovation, and for many people living in the state, access to affordable healthcare is a matter of life and death,” the supporter wrote. “The waiver allows the state to improve coverage and affordability, and ensure (high-quality) care. I fully support the state’s application to extend approval, and I strongly suggest that they be granted approval.”
MHBE states that the waiver’s goal was to reduce overall premiums by 30 percent, but it exceeded that target in each year. In 2019, overall premiums were reduced by 33.8 percent; in 2020, they were reduced by 37 percent; in 2021, they dropped by 32.8 percent; and in 2022, they decreased by 31 percent.
An overview of the waiver’s estimated impacts includes the average premium reduction of 34 percent and increased enrollment coverage by 6.4 percent. Additionally, the five-year federal savings amount is estimated to be $2.2 billion.
CMS Administrator Chiquita Brooks-LaSure stated that the waiver’s extension will run from Jan. 1st, 2024 to Dec. 31st, 2028, in the CMS approval letter sent on June 28th.
“The departments remain committed to working with state partners to advance healthcare coverage policies. Through section 1332 waivers, the departments aim to assist states with developing health insurance markets that expand coverage, lower costs, and ensure that affordable health coverage is available for their residents.”
— Chiquita Brooks-LaSure, CMS administrator
The renewal of the reinsurance program will lower individual market premiums and premium tax credits, which will be transferred to the state to be used for implementation of the waiver plan, Brooks-LaSure added.
The Department of Health and Human Services and the Department of Treasury have determined that the waiver extension is projected to provide coverage that is, at minimum, as comprehensive as it was without the waiver. It will also provide coverage and cost-sharing protections against massive out-of-pocket spending that are as affordable as they would be without the waiver. The waiver will provide coverage to a larger number of people without increasing the federal deficit.
According to the departments, individual market consumers should continue to see lower premiums, which should attract new customers and retain current consumers. They estimate that statewide average premiums for 2024 will be approximately 34 percent lower in the individual market than they would have been without the waiver, and that individual market enrollment will be about 6.4 percent higher for that year.
In a press release, MHBE Executive Director Michele Eberle said that the extension of the Reinsurance Program is fantastic news for the state, and will enable residents to have greater access to affordable healthcare coverage.
“Maryland’s Reinsurance Program has been very successful at keeping rates affordable for everyone who buys individual insurance in Maryland, on or off the exchange. It has played a particularly important role in stabilizing premiums for Marylanders who do not qualify for subsidies.”
— Kathleen Birrane, Maryland insurance commissioner
According to MHBE, Maryland has offered the third-cheapest average monthly health insurance premiums in the nation through state marketplace coverage at $472 this year, following Utah at $431, and New Hampshire at $469. So far in 2023, the state has seen its fifth consecutive year of enrollment growth, totaling 182,166 individuals.
Communities of color, which have historically lacked health insurance, have also seen increases in enrollment in Maryland. MHBE stated that enrollment of Black individuals was up by almost three percent this year. Enrollment for Hispanic individuals increased by nine percent, and it increased by 13 percent for Hispanic individuals who are between the ages of 18 and 34.
The departments stated that the federal government anticipates spending less on premium tax credit (PTC) under the waiver than it would without the waiver. Maryland is expected to receive ‘pass-through’ funding to support the state waiver plan, based on the portion of PTC that would have been provided to Marylanders absent the waiver.
“This amount will be reduced, if necessary, to ensure deficit neutrality,” according to the press release. “With the extension of the enhanced PTC, the state estimates that the waiver will produce net federal savings of $453.7 million in 2024 and $2.2 billion in total over the five-year waiver period. This pass-through funding will cover a substantial portion of state costs for the reinsurance program.”