By Barry Rascovar
Jan. 3, 2018 — First, the good news: Gov. Larry Hogan has named a new health secretary who not only knows what he’s doing health-care wise but also is an experienced “Mr. Fixit” when it comes to devising solutions to knotty problems.
Now the bad news: Bobby Neall has a king-sized dilemma staring him in the face as he steps into his Baltimore office suite on Jan. 9: The perilous steps taken by Republicans in Washington to subvert and eventually kill the Affordable Care Act, better known as Obamacare.
Over 150,000 Marylanders signed up for Obamacare insurance coverage in the recently closed enrollment period, even though premiums are skyrocketing.
According to Chet Burrell, president/CEO of CareFirst BlueCross BlueShield, without rapid response from State House leaders “we believe the individual market segment” of Obamacare “will catastrophically fail in the next 12 to 24 months leaving tens of thousands of individuals without affordable coverage options.”
Given that CareFirst is far and away the dominant insurer in Maryland’s individual market, that’s an alarming prediction but one many health care economists have been warning about.
Here’s the immediate problem: President Trump and congressional Republicans tacked onto their giant tax-cut law a provision that eliminates from Obamacare the mandate that every adult have health insurance or pay a penalty at tax time.
Thanks to Trump & friends, there no longer is any punishment if adults want to go without health-care coverage.
This move “constitutes a direct threat” to Maryland’s individual market, Burrell says in a letter, “because it will almost certainly accelerate a ‘death spiral’ already underway in this market segment by spurring younger and healthier people to exit the market — leaving too high a concentration of those who are ill to make premiums affordable to all.”
Since 2014, CareFirst has jacked up Obamacare premiums 150 percent — “horrific increases” Burrell calls them — yet the insurer lost over $400 million insuring people in this market.
He says his company expects to lose as much as $100 million more over the next year and could be forced to raise rates another 50 percent in 2019.
At that point, he notes, health-care coverage for this group — whose incomes are not quite low enough to qualify for government subsidies — could become unaffordable, both for individuals and for insurers.
Burrell suggests it is time for Annapolis to devise “sound public policy” that helps provide insurance for “a population that undeniably needs coverage.”
Enter, Bobby Neall.
He’s got years of experience running the state’s largest managed-care organization for Medicaid recipients. In short order, he turned a money-losing operation into a profitable business for Johns Hopkins Health Care while also increasing quality indicators. He’s exceptionally well-liked and respected by state legislators, too.
Yet there’s not much time to come up with a brand-new state insurance program. In four months, health-care insurers must submit their rates for 2019. Time is the enemy.
Fortunately Burrell has put a plan on the table that might be controversial with his fellow insurance executives but points to a way out of this bind.
Here’s what he suggests:
- Simplify Maryland’s public insurance option by offering just one plan with a $1,000 deductible and an out-of-pocket cap of $3,500.
- Create a state health-care fund to re-insure individuals with high medical costs and for people needing premium subsidies.
- Impose a 3 percent fee on insurers who do business in Maryland but fail to participate in the ACA market (at the moment only CareFirst and Kaiser offer such policies).
- Pass a law mandating that every adult in Maryland obtain health insurance or pay a tax penalty that goes into the state health-care fund.
- Base future premium subsidies on age and income so that younger adults are eligible for attractive insurance rates.
CareFirst analysts believe these steps could lower premiums up to 40 percent, cut out-of-pocket expenses for most individuals and draw many more younger, healthier Marylanders into the program.
That would be a win-win-win.
This plan may not check all the boxes. It may draw considerable opposition. But it gives the new health secretary a concrete starting point and knowledge that the state’s largest insurer stands behind the plan.
Prompt Action Required
Burrell points out, though, that his proposal requires a waiver from the Centers for Medicare and Medicaid Services and General Assembly action. Lots of actuarial and economic analysis must be submitted and lots of discussions must take place to hammer out a consensus in Annapolis in short order.
From the governor’s perspective, finding an answer is a political imperative. Hogan cannot afford to be saddled with the charge he failed to help middle-income Marylanders keep their health insurance coverage.
The last thing he wants is to face that charge in the midst of his re-election campaign. It’s a potential issue that could anger and energize interest groups favoring broad health-care coverage.
Burrell is offering a public-private solution, which should appeal to the governor — not a state handout.
There’s much to like in his plan. But Health Secretary Neall knows only too well the proverbial devil lies in the details.