Maryland issues insurance rates that are among lowest in U.S.

By Lena H. Sun, July 27, 2013 - The Washington Post

Maryland insurance officials approved final rates Friday for health plans to be sold in the state’s new online marketplace that are among the lowest in the country. The plans, which are for individuals, will be sold beginning Oct. 1.

The Maryland Insurance Administration approved premiums at levels as much as 33 percent below what had been requested by insurance carriers. For a 21-year-old non-smoker, for example, options start as low as $93 a month. Insurance Commissioner Therese Goldsmith reduced the proposed premium rates by every insurance carrier in the individual market, including some by more than 50 percent, according to an analysis by Maryland officials who will be operating the marketplace.

The rates offered by nine carriers are among the lowest of the 12 states that have proposed or approved rates for comparison to date, and among the lowest in the D.C. area.

“We are pleased that Maryland is among the lowest in the country,” said the state’s health secretary, Joshua Sharfstein. He said the rates were an important step for the Oct. 1 launch of the online marketplace, the Maryland Health Connection.

According to the analysis, a 25-year-old buying the cheapest “bronze” plan — with the lowest premium but higher out-of-pocket costs — would pay $119 to $129 a month in Maryland, compared with $151 in Washington and $134 in Virginia. A 50-year-old could buy a “silver” plan and pay $260 to $269 a month in Maryland, compared with $319 in New York and $329 in Virginia.

Officials said the state’s analysis also showed that a majority of Marylanders expected to purchase health insurance through the marketplace will be eligible for tax subsidies to reduce the cost of coverage under the federal health-care law, known as the Affordable Care Act. Subsidies would be available for Americans who earn less than 400 percent of the poverty line, about $45,000 for an individual.

Dan Mendelson, chief executive of Avalere Health, a health-care consulting firm tracking implementation of the health-care overhaul, said Maryland’s low rates are consistent with states where there is strong competition among insurance carriers and among hospitals and other provider networks. Nationally, the rates approved or proposed so far have been below analysts’ expectations, Mendelson said.

“In some ways, these are ideal circumstances because rates are so low, but we still have to see whether people will actually go out and buy this product,” he said.

A spokeswoman for the Health and Human Services Department cited Maryland’s news as another example of how the federal law was “providing families with affordable and new choices.”

Under the law, insurers in all states must provide health insurance for individuals that includes a basic package of benefits, including maternity, preventive and mental-health services. In the past, insurance carriers have been allowed to deny applicants based on pre-existing conditions. Starting next year, they will no longer be able to do so.

An estimated 14 percent of Maryland’s population of 5.8 million, or about 740,000, are uninsured.

Nine carriers sought to offer health plans, including two companies new to Maryland. The carriers are Aetna Life Insurance, All Savers Insurance, CareFirst BlueChoice, CareFirst of Maryland, Coventry Health and Life Insurance, Coventry Health Care of Delaware, Evergreen Health Cooperative, Group Hospitalization and Medical Services, and Kaiser Foundation Health Plan of the Mid-Atlantic States.

Individuals who enroll before Dec. 18 will have coverage beginning Jan. 1, 2014.

Plans for groups such as small businesses will be sold starting Jan. 1 for coverage beginning March 1. Those rates have not yet been approved by the insurance administration.

Insurance plans sold on the exchange are categorized as bronze, silver, gold or platinum based on how costs are shared. Bronze plans are likely to have lower premiums but higher out-of-pocket costs, such as deductibles, co-pays and coinsurance. In addition to these four “metal levels,” high-deductible “catastrophic plans” are available for adults younger than 30 and other qualifying individuals. All plans provide coverage for the same set of essential health benefits.

Four factors can affect the premium rate: age, area of the state where the person lives, whether the person uses tobacco and how many people are covered by the plan. In addition, if a company does not spend at least 80 cents of every premium dollar on medical care, policyholders will receive rebates.

Maryland is among the 31 states that have authority to deny rate increases, giving regulators the final say over whether health-law changes justify an increase in premiums.