Testimony for HB 785

Health Reimbursement Accounts for Small Group Health Insurance (Reinsurance Pool)
presented to the
House Health and Government Affairs Committee
February 21, 2003
by
Delegate Adelaide Eckhardt

Good afternoon Chairman Hurson and members of the House Health and Government Operations Committee. It is good to be back here today and
present for you HB 785. This bill is the product of a work group convened this past fall to provide a sample of some ideas as you continue the shaping our healthcare delivery system in Maryland. I believe a crisis exists, a perfect storm if you will, as we continue to experience increasing costs of care, increasing numbers of uninsured, small employers finding it harder to provide health insurance for their employees, individuals in the same dilemma and Marylanders are living longer. The improved and rapid advances in technology have contributed to improved care but have added costs. You all have, as well as others have, worked diligently to craft an effective system. It is important to proceed with all that is good and working with our system, but we also have an opportunity to work closely with the folks in Washington to further develop that system.

Over the years I have consulted with many who have reinforced that Maryland is in a unique position to take advantage of the opportunity before us. Bob
Moffit of the Heritage Foundation has several steps worth the committees’ consideration that, I believe, could retain the best of our current system while solving problems and moving toward more competition, lower costs, more coverage and increased personal responsibility. Specific steps could include:

1. Conduct a study of the current costs of the uninsured, i.e., how much Maryland Taxpayers already spend for the uninsured.
2. Take a state wide inventory of private plans, in the individual market, and create a statewide information clearinghouse for individuals and businesses on available health plans.
3. Make sure policies available to Maryland’s uninsured are affordable.
4. Review current state health insurance regulations, and make a cost benefit assessment of these regulations, their impact on the cost and affordability of private policies.
5. Supplement any federal tax credits or subsidies for the uninsured with state tax credits or premium subsidies.
6. Secure HHS waivers to use Medicaid or SHIP funds to supplement subsidies for private health insurance.
7. Improve access to physicians and preventive care among Medicaid recipients.
8. Create a Maryland Reinsurance Pool to cope with adverse selection.Set up a state-based version of a competitive system that would function like the Federal Employees Health Benefits Program.

HB 785 describes the Health Reimbursement Account that would be offered in the small group health insurance product. The second part of the bill
identifies a reinsurance pool that all insurers to which all insurers offering small group products would contribute. It also has a provision that would allow self insured plans to voluntarily participate. Currently the law outlines in Small Group statute a reinsurance mechanism. The difference is that of mandatory participation. By emphasizing this pool, the risk to insurers is addressed and more insurers may participate. Please keep in mind that risk seems to be the primary concern for insurers and if we ever decide to expand small group, risk has been addressed. Other states are using the reinsurance model and in fact, some states have included their high risk pool in the reinsurance pool.

I appreciate your consideration of these ideas as you deliberate this year. While I recognize that this is not the year for major changes, the conversations will continue and if in your estimation this bill does not pass this year, I hope I have provided you with food for thought.