Coming to Maryland Soon, The UNaffordable Care Act

from the Baltimore Sun

Maryland Attorney General Douglas Gansler urged state regulators Tuesday to cap the amount that insurers can raise premiums under the new health care law to no more than 5 percent until more is known about how the sweeping federal legislation will affect health costs.

The call comes as the Maryland Insurance Administration reviews requests by insurers to raise rates on those who will buy coverage from a statewide exchange, or open marketplace, established under the Affordable Care Act.

CareFirst BlueCross BlueShield, the region's largest insurer, is seeking an average rate increase of 25 percent for those who buy coverage individually. Some of its customers could see increases of 100 percent to 150 percent.

The issue reflects the continued uncertainty and challenges facing states as they implement the federal health care law, key provisions of which will go into effect in January.

No one knows how many people will sign up for health coverage or how much it will cost to implement the system. The Obama administration says costs will go down as more people enter the system.

Critics, including insurers across the country, are bracing for the higher cost of covering more and sicker people. Some say that the practice of denying coverage to people with pre-existing conditions helped to keep insurance costs down.

Under the Affordable Care Act, insurers may no longer refuse policies to those with pre-existing conditions.

Maryland, which is ahead of other states in implementing the provisions of the health care law, is experimenting with its own plan to lower costs. Officials are trying to persuade the federal government to adopt a plan that would tie hospital rates to the state's economy.

But the Centers for Medicare and Medicaid, the federal agency that administers the programs, won't decide on the state's proposal until later this year. In the meantime, state officials must make difficult decisions.

Gansler, a Democrat who is expected to seek his party's nomination for governor in 2014, wrote a "friend of the court" brief on behalf of several states that supported the Affordable Care Act. He argued that Congress had the right to mandate that Americans buy health insurance as a means of regulating the economy under the Commerce Clause of the U.S. Constitution.

The rate proposals that Gansler is contesting would not affect most people, who purchase insurance through job-based plans.

Gansler said it is unfair for insurers to request huge increases before the full impact of the health care law is known. He said rates should be capped and then re-examined six months after the law takes effect.

He contends that raising premiums will price people out of the market, defeating the purpose of the federal law, which is to make health insurance more affordable and expand the number who are covered.

"We don't know what is going to happen to health care costs, but the insurance companies are preying upon the idea that they will rise to jack up premium costs," Gansler said.

Under state law, Maryland Insurance Commissioner Therese M. Goldsmith has the sole power to review and approve insurance premiums. Gansler has no legal authority to set the rates, but he could sue to obtain a refund for consumers if it is found that they were gouged by unnecessarily high rates.

Goldsmith declined to be interviewed for this article. Her office released a statement saying that the rate requests are under review and that the commissioner will consider "all relevant factors" under the law.

"The law requires that the commissioner disapprove or modify a proposed premium rate if, based on statistical analysis and reasonable assumptions, the rate appears to be inadequate, unfairly discriminatory, or excessive in relation to benefits under the plan," the statement read.

Chet Burrell, the CEO of CareFirst, has said insurers need to implement a 25 percent premium increase because the cost of health care under the law is uncertain. He said the company's margins leave little room for mistakes.

"As a not-for-profit carrier, CareFirst operates essentially at cost and over the past five years has never produced an operating margin greater than 1 percent," the company said in a statement. "Premiums closely reflect actual cost. That is essentially what CareFirst has sought to achieve in its filings and nothing more."

CareFirst, which has 2.2 million customers in Maryland or 48 percent of the market, said the attorney general should let the rate approval process play out before criticizing it.

Under the Affordable Care Act, small businesses purchasing through an exchange would see CareFirst rates rise on average about 15 percent because of rising health care costs and new taxes, fees and assessments required under health care reform, according to the insurer.

Older individuals could see decreases under the proposed rates, but Burrell has said younger people could see increases of as much as 150 percent, reflecting limits on how much rates can vary based on age.

Kaiser Permanente laid out nine plans for individuals in its proposal to state regulators, and said "the weighted average rate increase" across all is 4.3 percent. The insurer expects to offer 15 plans under the small group market at an average rate increase of 2.8 percent.

"Although some provisions of the Affordable Care Act appear likely to contribute to premium increases, others will likely contribute to reductions in premiums," the insurer said in a statement Tuesday.

State Sen. E.J. Pipkin, the Senate Republican leader, is concerned about how the state will pay to insure more people. State officials estimate that one-third of Maryland's 750,000 uninsured residents will gain coverage under the federal act in its first year.

"The fact of the matter is, no one has been able to show how we're going to nationally cover 30 million people without increasing the supply of doctors and medical providers and at the same time keep costs down," the Eastern Shore lawmaker said. "When you look at other states that have done this, if you give insurance to people who don't have insurance, they will use it."

Pipkin also criticized the plan suggested by the state to link hospital spending to the state's economy. He worried that people wouldn't get care when they need it.

"If the state hits its cap on hospital expenses and the doctors said you need a hip replacement, does that mean you don't get the hip replacement because the cap is exceeded?" Pipkin asked.

Gansler's campaign has said that he will not formally announce his plans for 2014 until the fall, but over the weekend he ruled out seeking a third term as attorney general — an alternative he previously had held open.

In January, Gansler's campaign reported $5.1 million in its account — establishing a fundraising lead over Democratic rivals to succeed Gov. Martin O'Malley. About $3 million of that was carry-over from the 2010 election, in which Gansler ran unopposed.

Lt. Gov. Anthony G. Brown, a Democrat who has declared his candidacy for governor, has made implementing the health care law a top priority.

Brown's office said he would not comment on the insurers' rate requests. His office referred questions to the Governor's Office of Health Care Reform, which is coordinating implementation of the law in the state.

Carolyn A. Quattrocki, executive director of the Governor's Office of Health Care Reform, said it was not right to comment on the hospital proposals while the rate process is under way.

"That is what the rate review process is for," Quattrocki said. "The whole process has been set up to test the assumptions that the insurance companies have put forward as a basis for their rates."

In making his announcement, Gansler showcased the owners of one small business who worry that higher insurance premiums will price them out of providing health coverage to employees.

The owners of Re Fresh Salon & Spa in Baltimore employ nine stylists, technicians and other workers, and say they have found it cost-prohibitive to provide them with insurance.

They are looking for ways to provide supplemental insurance but worry that higher premiums will keep them from doing that and prevent their employees from buying insurance on their own as well.

"When you hear you're going to be outpriced, it's not a good feeling," said JoVonne Day-Miles, co-owner of the salon.