Md. panel recommends taxes, fees to pay for health exchange

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Photo - (iStock photo via ThinkStock)
(iStock photo via ThinkStock)
Local,Maryland,Rachel Baye

A Maryland panel is recommending that the state charge a combination of taxes and fees to pay for the roughly $35 million annual cost of running the state's health benefits exchange, the insurance marketplace required under the federal health care law.

Among the fees the committee of state lawmakers and health officials suggests are new charges on individual ratepayers and increases to existing charges on health care professionals. Gov. Martin O'Malley and the state legislature will make the final call when the General Assembly session starts in January.

The panel also recommended an increase in the state's tobacco tax. If 18 cents from a tobacco tax increase went to the program, it would cover the exchange's estimated $21.3 million in annual fixed costs, according to the report.

The exchange is expected to cost roughly $35 million to operate in 2015, $34 million in 2016 and $33 million in 2017, according to the report. Determined primarily by enrollment -- which is expected to average 198,000 over the three years -- those costs break down to a monthly $16.75 per person in 2015, $14.66 in 2016 and $12.64 in 2017.

To help pay for those costs, individual ratepayers could face a flat fee charged to every member of a qualifying health insurance plan -- with additional fees tacked on for vision and dental plans -- or pay an additional percentage of their insurance premiums.

The fees could be charged just to Maryland residents who purchase plans from the new marketplace or to all residents with health insurance, though the panel recommended charging the fees to all insurance holders. Charging only health exchange participants would increase the fees and the financial risk to the state, especially in the first few years when the number of participants in the exchange is expected to be growing.

Large commercial insurance companies should have to pay more, as that would reduce the overall cost to residents, the panel recommended.

Doctors and other licensed medical providers could face increases in existing fees, as could hospitals. However, the committee recommended against increasing charges on hospitals, since the state is close to the federal limit on hospital-based fees, and limiting fee increases on other health care providers.

Because the state's health benefits exchange needs to be self-sufficient by 2015, ratepayers could start feeling the effect of the fees in 2014, said Maryland Health Benefit Exchange Executive Director Rebecca Pearce.

Though insurance carriers and doctors likely would pass the new fees down to ratepayers and patients through increased premiums and service costs, the exchange will increase competition, lowering premium costs, the report says.

rbaye@washingtonexaminer.com

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Rachel Baye

Staff Writer - Education
The Washington Examiner