Consumer Health First Applauds State Plan to Win Federal Approval for Health Care Reinsurance Program

Consumer advocacy group calls on insurance companies to release information about causes of soaring insurance premiums in the individual market

BALTIMORE – With the state of Maryland seeking federal approval for a reinsurance program to bring down premium costs in the individual health insurance market, Consumer Health First, the statewide consumer advocacy organization, issued the following statement of support.

“We applaud the Governor and the Insurance Commissioner, the General Assembly and the Maryland Health Benefit Exchange (MHBE) for their efforts to temper premium increases in the individual market by creating a state reinsurance program funded in part by the federal government. If approved by the federal government, a reinsurance program would give money to insurers for high-cost claims, meaning insurers no longer would have to rely solely on premiums to cover the costs of claims. This allows insurers to lower premiums.

“Consumer Health First pledges to work on behalf of consumers to ensure that a state reinsurance program that delivers new monies to insurers is not simply a giveaway. It must be a consumer-centric partnership between government, insurers, providers and consumers to reestablish affordable, high-quality and comprehensive health insurance in the individual market.

“While we support this effort, it is not enough to protect consumers’ access to affordable, comprehensive coverage in the individual market.

“As the largest insurer in Maryland, we call on CareFirst to disclose:

  • The health conditions and health services responsible for the eye-popping premium increases for its PPO and HMO policies in the individual market from 2014 to 2018;

  • The health improvement programs CareFirst has put into place in partnership with

    providers and patients to lower health care costs; and

  • The savings CareFirst expects to realize from the federal tax changes for BlueCross

    and BlueShield companies and CareFirst’s plans to use these savings to benefit consumers in the individual market.

“We call on the Maryland Insurance Administration (MIA) to require CareFirst to:

  • Disclose the information outlined above in its rate filings; and

  • Consider these items in the MIA’s review of CareFirst’s 2019 rates.
    “We call upon the MHBE to design a reinsurance program to reassure consumers that this is not a giveaway to CareFirst by:

  • Designing a reinsurance program equally benefiting customers of both CareFirst and Kaiser – the only two insurance carriers in the individual market; and

  • Requiring CareFirst and Kaiser to provide the same comprehensive benefits that have been available to consumers since 2014.”


The Affordable Care Act created the promise of health insurance for those who had previously been denied it due to a pre-existing condition. In addition, it made health insurance affordable for those not covered by an employer or public plan by providing financial assistant to individuals whose household income ranged from 133 percent to 400 percent of the Federal Poverty Level (FPL). As a result, the number of Marylanders with health insurance through the individual market increased from about 150,000 in 2013 to over 290,000 in 2016.

This expansion resulted in unintended consequence. The rise in health insurance rates from 2014 to 2016 was relatively low. However, since then the rates have increased dramatically as insurance carriers addressed changes in the individual market, including the high claims costs for a relatively small number of individuals. According to data published by the MIA, a silver plan for a 40-year old individual increased from $240 per month in 2014 to $686 in 2018 for a CareFirst PPO policy, from $216 per month in 2014 to $466 in 2018 for a CareFirst HMO policy, and from $312 per month in 2014 to $448 for a Kaiser HMO policy. This has made insurance unaffordable for many Marylanders and particularly those whose income is above the 400 percent FPL level.