According to an issue paper (the “Paper”) published on the Maryland General Assembly’s website, implementation of the ACA in the State has resulted in an increase in health insurance coverage for Marylanders. The Paper points out that substantial revision to the ACA could have far reaching implications for the State.
A significant portion of the increased health insurance coverage in Maryland came through the expansion of the state’s Medicaid program. If the ACA’s “enhanced” funding mechanism for that expansion is repealed, Maryland (along with 31 other states) must decide whether to maintain the expansion, albeit at a substantial increase in state expenditures.
The ACA includes an “enhanced matching rate” for the Maryland Children’s Health Program (“MCHP”) through September 2019. The MCHP, begun in July 1998, provides full health benefits for low-income children up to age 19 through the use of federal and state funds. MCHP enrollees obtain care from a variety of Managed Care Organizations through the Maryland HealthChoice Program. The federal enhanced matching rate is 88% of the state’s expenditure, up from 65% in FY 2012. Again, loss of the enhancement would result in a substantial increase in Maryland expenditures.
While state law mandates an annual appropriation of at least $35 million for the Maryland Health Benefit Exchange, the State will need to decide whether to continue it and, if maintained, how to continue its funding. The federal government is a substantial source of funding for the Exchange under provisions of the ACA.
Repeal of the ACA could have a profound impact on the Maryland all-payer model contract that governs hospital rate setting. If the ACA is repealed, Maryland could eventually lose the model contract, putting in jeopardy $2.3 billion in Medicare and Medicaid payments to Maryland hospitals per year. The Health Services Cost Review Commission approved a downward adjustment in hospital rates to reflect a reduction in uncompensated care due to the ongoing impact of Medicaid expansion under the ACA. Repeal of the ACA could force a re-examination of those rate reductions.
The ACA’s prohibition on the denial of coverage for a preexisting health condition eliminated the need for the Maryland Health Insurance Program (“MHIP”). A revision of the ACA may reinstate state-based high risk pools for individuals with preexisting conditions who allow their insurance to lapse. MHIP was funded with an assessment on hospitals that was added to hospital rates. Restoring MHIP with the same funding source would add costs to hospitals.
The State would need to determine the coverage requirements for health benefit plans no longer subject to the ACA’s minimum coverage requirements. A decision would need to be made as to whether to require plans to continue to cover ACA-mandated benefits.
The State has adopted a number of changes to insurance law to conform with and implement the ACA. The changes include limits on premium rate variation based on age and geography, which have been credited with helping older individuals afford insurance but faulted for keeping younger and healthier individuals out of the market. Repeal or significant revision of the ACA may require the State to rollback and alter a number of these provisions to harmonize State requirements on carriers. State legislation also repealed a number of provisions of insurance law obsolete under the ACA that may need to be reestablished, such as standards governing medical underwriting by insurers.
It is clear that any substantial revision to the ACA would have a profound impact in Maryland. At this time, what form that revision may take is unclear. For additional information contact one of PK Law’s Attorneys or information@pklaw.com.
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