Maryland legislature approves plan to stabilize state's ACA Market

There are roughly 150,000 consumers in Maryland's private insurance market purchasing ACA policies. Yesterday, lawmakers approved a $380 million reinsurance program in an effort to keep premiums from rising and save Maryland's Exchange from possible collapse. (read the full story in the Baltimore Sun)

Legislators also charged a new commission with studying the state's health insurance market and are looking into the possibility of an individual mandate for Marylanders to purchase insurance to replace the federal mandate that expires next year.

The $380 million comes from a 2.75% tax on the premiums that insurers sell in the state. It's not a new tax - they have been paying it as part of the ACA, but Congress repealed the tax in the coming year, so Maryland put it back. The proceeds will be used to create a reinsurance program that insurers can then tap into to cover catastrophic claims in the ACA market. Additional legislation approved this week allows Maryland to access federal money to supplement the new state tax revenue and potentially pays for more years of the reinsurance.

This should prevent premiums for people not poor enough to qualify for Medicaid, and not old enough to qualify for Medicare from jumping as much as 50% for another year. Insurance analysts hope to cut expected premiums by half.

Maryland is now the 5th state to create its own reinsurance program and seek federal support for funding it, but Maryland is the only state to create a solution for the lapse in the federal insurer tax by taxing insurers themselves.