The CMS gave Maryland a green light to start a reinsurance pool for its Affordable Care Act exchange, and the state estimates the program will effectively cancel out the previously projected 30% average rate hike for 2019.
The waiver will lower premiums by an estimated 30% according to the state's application, and officials figure this will bump up exchange enrollment by nearly 6%. Earlier this year, Maryland predicted one of the highest average premium increases nationwide for its Obamacare exchanges.
Michele Eberle, executive director of the Maryland Health Benefit Exchange, called the program "the largest of its kind in the country to bring rate relief to the individual market, particularly to residents who don't qualify for financial help with monthly premiums."
The waiver is slated to cost $462 million next year, $365 million of which will be funded by a 2.5% tax on health insurance and Medicaid managed-care plans. State actuaries also estimate the federal government will save more than $300 million next year in subsidies once the reinsurance program is up and running for the state's two remaining insurers, CareFirst Blue Cross and Blue Shield and Kaiser Permanente.
CareFirst had raised its individual market premiums by an average of 50% for 2018.
Next year the reinsurance program will reimburse the insurers for 80% of high-cost claims up to $250,000, but Maryland hasn't decided how high the claims need to be before the co-insurance kicks in. State officials will work with stakeholders to set that threshold. The state also hasn't set the co-insurance rate for subsequent years.
Maryland joins seven other states that have received CMS approval for reinsurance programs. It's the second state to garner approval this year after congressional plans to establish a federal reinsurance pool fell apart in the spring.
The failure of the so-called stabilization package, which also would have funded the cost-sharing reduction payments insurers have to pay out for low-income enrollees, left states scrambling to try to set up their own reinsurance programs with the approval of their legislatures and governors.
Maryland submitted its waiver application to the CMS on May 31.