Maryland Launches New High-risk Pool

Published July 1, 2003

Beginning this month, Maryland will offer a new health insurance program to residents unable to obtain private insurance because of high risk and preexisting medical conditions.

The program, a form of high-risk insurance pool, will be named the Maryland Health Insurance Plan (MHIP).

Mary Spear, state affairs director for the Council for Affordable Health Insurance, praised the measure.

“The Maryland Insurance Plan is another example of how high-risk pools can serve as a safety net for uninsurable individuals,” she said. “CAHI commends Maryland for its commitment and dedication to serving the unique needs of its uninsurable citizens.”

Lee Tooman, vice president of government relations for Golden Rule Insurance Company, agreed. “Golden Rule is very pleased Maryland has joined the majority of states in enacting a comprehensive health insurance plan for uninsurable persons and persons eligible through HIPAA,” said Tooman.

“MHIP is the ideal vehicle to provide the coverage. It can promote itself and reach out to eligible persons so they don’t slip through any cracks. It subsidizes their premiums so they can afford the coverage.”

MHIP will be funded by assessments on Maryland hospitals, a mechanism Tooman approved. “Maryland established a very broadly based mechanism for the subsidy so everyone in Maryland will help with the subsidy, not just the relatively few people with fully insured health insurance plans.

“The hospitals themselves supported this method of subsidy,” said Tooman, “because they felt a lot of uncompensated care would be eliminated. We agree”

SAAC Replacement

MHIP replaces an existing program, Substantial, Available and Affordable Coverage (SAAC), established in 1970. Under the SAAC plan, insurers and HMOs were given discounts on hospital rates in exchange for accepting all applicants during two open enrollment periods per year.

SAAC provides coverage to roughly 7,500 residents through three participating health plans, including CareFirst BlueCross BlueShield. All three insurers had threatened to abandon the program.

Critics of SAAC said the insurers received millions of dollars in hospital discounts to provide coverage to participants, but the program’s premiums were so high it discouraged participation, leaving too many people without access to coverage.

Capped Premiums

Richard Popper, who has been named executive director of MHIP, said benefits under the new program would be similar to those offered by SAAC. He expects that after one year in operation, enrollment in the new plan will be twice the enrollment achieved by SAAC–at least in part because eligibility for MHIP has been extended to Bethlehem Steel retirees who lost their company-sponsored health benefits, and to workers at a Black & Decker plant that is closing.

Providers offering coverage under the new MHIP may not charge premiums less than 110 percent or more than 200 percent of the standard risk-calculated rate. Premiums will decrease for about 66 percent of current SAAC participants. For participants in the SAAC’s HMO plan, premiums will increase by between $42 and $120, because those premiums have been so low as to be unsustainable.

MHIP participants will be able to enroll year-round, rather than only during the SAAC open enrollment periods. Participants will be able to switch health plans once a year.

Participants will be permitted to see their current doctors for the first 90 days of the new program, after which time they must use a doctor participating in MHIP. According to Popper, about 300 of the 3,500 doctors and medical groups that served SAAC have joined the new program.

MHIP participants will be able to enroll in a preferred provider organization, under which they will pay a deductible, or apply to an exclusive provider organization, which does not have deductibles but charges higher premiums.

“High risk pools are a proven means of addressing the uninsurable problem in the states,” CAHI’s Spear noted. “Congress has demonstrated its confidence in the success of high-risk pools by committing $40 million to states which meet federal guidelines for establishing and managing high risk pools.

“Maryland is a leader in (1) meeting those federal guidelines and (2) recognizing the gravity of the uninsurable problem and implementing a responsible plan to address the issue,” she said.

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].