Small Business Majority highlights the passage of Maryland's Reinsurance bill

Wednesday, April 18, 2018

This opinion piece, authored by Mid-Atlantic Director Erik Rettig, originally appeared in the Baltimore Business Journal and discusses the importance of Maryland's new reinsurance program to small businesses and the state's healthcare system overall.

Opinion: Maryland's reinsurance bill is good for small business

The most surprising development in Maryland this month wasn’t a snowstorm but the fact that the General Assembly and Gov. Larry Hogan put politics aside to pass a law that will rescue the state’s entrepreneurs and small business employees from skyrocketing health care costs.

Maryland lawmakers just approved a bill that will curb the cost of health insurance premiums for 150,000 residents through a $380 million reinsurance program. That's money that can be used by insurers to pay for some of the costliest claims made by customers who purchased insurance through Maryland’s health insurance marketplace. States like Maryland are looking at these programs because they can help stabilize premiums in the individual marketplace by helping to compensate insurers for their most expensive customers.

This move was necessary because the Trump administration and its allies did so much in 2017 to destabilize the ACA that its state marketplaces could collapse. These moves included the administration’s saying it would stop paying the cost-sharing subsidies that help lower deductibles and co-pays of low and moderate-income ACA enrollees, slashing ACA marketing and outreach, shortening the open enrollment period, and repealing the ACA’s individual mandate.

Maryland’s timing is excellent. Since Congress failed to include a package to stabilize the ACA in its last omnibus spending bill, health insurance premiums for plans purchased through the ACA marketplaces were estimated to increase up to 30 percent in 2019 on the heels of a similar hike in 2018. But thanks to Maryland’s reinsurance measure, premium growth in Maryland could be sliced in half for next year.

This is great news for small businesses, which rely on the ACA marketplaces for quality, affordable health insurance. In fact, a Small Business Majority analysis found more than 5.7 million small business employees are enrolled in ACA marketplaces, and more than half of all marketplace enrollees nationwide are small business owners, self-employed or small business employees.

Maryland is now one of at least five states that are trying to prop up the ACA through reinsurance programs, along with Alaska, Oregon, Minnesota and Oklahoma. Hopefully more states will take this necessary step since lawmakers in Washington, D.C., seem incapable of doing anything to keep insurance costs down for small businesses. 

Unfortunately, more needs to be done to lower healthcare costs for small firms. First, Maryland’s reinsurance program needs to be made permanent, not only available for 2019, and other states should follow suit. Second, healthcare marketplaces must be further bolstered by guaranteeing federal payments to insurers for cost-sharing subsidies.

The administration should also avoid taking steps that would make it easier to establish association health plans, as these plans don’t have to follow rules requiring the coverage of essential health benefits and allow for insurers to charge different premiums based on things like gender or preexisting conditions. Allowing these association health plans to enroll more small businesses would create separate risk pools, undermining the small group market and raising costs for small businesses with older or sicker employees.

If nothing more is done to stabilize the ACA marketplaces, small businesses and solo entrepreneurs in most states will face some very difficult choices. Premiums could become so costly that many small employers will be forced to stop offering insurance to their employees, while solo entrepreneurs will have to go work for someone else just so they can afford health coverage. It’s wonderful Maryland is leading the way against this grim future, and we hope Gov. Hogan will encourage his counterparts around the country to take action — as he did — for the good of small businesses.