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Maryland Creates State Reinsurance Program to Control Premiums

Maryland has passed a law to create a state reinsurance program and use federal reinsurance waivers to limit the growth of health plan premiums.

Maryland passed law to develop state reinsurance program.

Source: Thinkstock

By Thomas Beaton

- Maryland governor Larry Hogan has signed legislation to create a state reinsurance program aimed at stabilizing health plan premium increases.

The reinsurance program will use state and federal reinsurance funding to pay catastrophic claims for members enrolled in Maryland Health Benefit Exchange (MHBE) plans. The reinsurance program is a response to the ten-year growth of consumer premium rates and an expected 50 percent increase in costs by 2019.

A fiscal policy note submitted with the bill indicates that state officials will request a 1332 state innovation waiver to allow federal funds to support reinsurance efforts. The state must wait for the MBHE’s Board of Trustees to formally vote to apply for a 1332 waiver to use federal pass-through funding to support reinsurance efforts.

In addition, the state will collect a total of $380 million in funds from MBHE insurers to support the reinsurance program.

Hogan praised Maryland’s lawmakers in the House and Senate for a show of bipartisan support that quickly sent the bill to his desk. The Senate voted 43-4 in favor of the bill and the House voted 130-6 just nine days later.

“This problem should have been solved in Washington, but nothing has been done. Our team has been working on potential solutions for more than a year, and I want to thank the Speaker, the Senate President, and legislators from both parties for working together with us in a common sense, bipartisan manner to address this crisis head-on and to prevent these massive rate increases,” Hogan said.

 “This is an example of what can be accomplished when we work together, and I’m proud to be signing these protections into law.”

Lawmakers and MBHE officials in Maryland have until July 8, 2018 to submit a 1332 to CMS for reinsurance approval.

 

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