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Advocates suggest ways to cut health insurance costs

Baltimore Sun
October 26, 2016
Meredith Cohn

State lawmakers heard from consumer advocates Wednesday on how to slow premium increases for those buying health insurance on the state exchange, proposals that might also moderate costs for the majority getting coverage through an employer.

Nearly 163,000 Marylanders got their insurance this year through the online health exchange created under theAffordable Care Act, and the majority get federal subsidies to help pay for it. But some must pay the full freight of increases ranging from 20 percent to 30 percent next year, and lawmakers were concerned about the long-term sustainability of the insurance program and the affordability of health care generally.

“We have to look at the cost drivers of health care,” said Del. Susan W. Krebs, a Carroll County Republican, during a hearing on insurance rates called by the House’s Health and Government Operations Committee and the Senate’s Finance Committee. “We’re just paying for more of the same system everyone is saying is too expensive.”

The hearing came as the federal health law, informally known as Obamacare, became an issue in the presidential campaign after federal regulators said midlevel health plan costs nationally would rise about 25 percent.

Republican presidential candidate Donald Trump renewed calls to repeal and replace the federal health law, while his Democratic rival, Hillary Clinton, has called for a public insurance option to spur more competition and higher subsidies for consumers to buy coverage.

Leni Preston, president of the advocacy group Consumer Health First, told lawmakers that the state could consider adding a public option if Congress failed to act. Another option suggested was merging the small-business and individual markets to widen the risk pool.

Maryland Insurance Commissioner Al Redmer told lawmakers his agency approved big rate increases this year because exchange consumers were sicker and thus costlier than insurers imagined. He said enrolling more young healthy people would help.

“If we don’t get the young folks, I don’t know if we’ll ever reach equilibrium,” he said.

Other advocates noted that exchange officials are already targeting healthy people who have avoided enrolling with messages about available subsidies and penalties for going without coverage. The federal penalty for 2016 is 2.5 percent of household income or $695 per adult, whichever is higher.

Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, called the health law successful because it cut the state’s number of uninsured in half to 6.6 percent last year from 14.5 percent before the 2010 law.

But he agreed fixes are needed and called for targeting a big cost driver: prescription drug prices.

He said the lawmakers could require drug companies to disclose spending on research and development to justify price hikes and to notify the public of price increases so companies could face scrutiny.

DeMarco also called for giving the state attorney general the authority to take legal action against drug companies when they gouge, though no state now has this authority.

“What we do here gets national exposure,” DeMarco said. “Others would follow our lead.”

DeMarco acknowledged that gaining wide support for some initiatives would be tough, and legislators didn’t indicate which might gain steam.

Additionally, some changes would have to come from Congress, such as alterations in how risk is spread among insurers.

Some consumers who don’t qualify for subsidies say the weight of increases is already burdensome.

Michael Delauter, a Frederick County lawyer who buys coverage on the individual market, said he paid a monthly premium of about $535 for his family of five in 2013. The bill rose to more than $989 this year and will go to $1,613 in 2017 — a 63 percent increase.

That’s with one fewer family member on the plan and a deductible that more than doubled to $13,100, he said. Changing plans means reduced doctor choice and maybe not much savings.

“If a presidential candidate ran on the position that he or she had a great way to help the poverty-stricken get health insurance — just tax the sole proprietors and small-business owners an additional $15,000 or $20,000 each year — he or she would be laughed off the stage,” Delauter said. “And yet that is basically the effect of the ACA.”

 

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