ANNAPOLIS – The state-run health insurance program that is intended to provide coverage for the poor and chronically ill has amassed more than $67 million in unspent funds, prompting some health officials to push to reduce the hospital tax that helps pay for the program.
Last year, legislation to trim the amount of money hospitals paid to the program failed in the General Assembly, as did Gov. Robert L. Ehrlich Jr.’s suggestion to use the extra funds to supplement malpractice insurance premium hikes. Then, the surplus was around $30 million. It’s now twice that and could triple by the end of this fiscal year.
Health insurance advocates call the proposed cuts “offensive,” saying the Maryland Health Insurance Plan has not done enough to recruit more of the 740,000 Maryland residents who lack health insurance.
“It’s absolutely the wrong approach when there are so many people who are uninsured and a good portion that are uninsurable,” said Glenn Schneider, who leads the Maryland Citizens’ Health Initiative. “MHIP is a good option for them if only they knew about it.”
And Eric Gally, a lobbyist for the American Cancer Society, asked, “How many agencies in this world try to give back money? MHIP’s charge is to help provide people with access to medical care . . . this entity created to help them shouldn’t be trying to throw money away and not do its job.”
The insurance program receives about $4.5 million each month from a hospital assessment tax – currently set at .08 percent of the total amount they bill to patients. But a large portion of that money has gone untouched due to a drop-off in the plan’s enrollment.
Patients who can’t afford commercial policies, or who are denied coverage because they have diseases such as AIDS or Alzheimer’s, qualify for the program. Monthly premiums range from $141 to $1,323, and applicants must prove they have been denied coverage from Medicare, Medicaid or employer-sponsored insurance, or if they were rejected due to health reasons.
MHIP originally provided coverage for more than 7,000 Marylanders – less than half of the plan’s full capacity – when it was created in 2002. But about 3,000 of them left the program within the first year, either because they couldn’t afford the premiums or because they were no longer eligible.
Since then, the program’s board of directors has lowered premiums and added benefits that increased enrollment by almost 30 percent in the past six months, said Richard Popper, MHIP’s executive director. But the board has not implemented other recruitment initiatives put forth over a year ago – including a $20-million income subsidy program and media campaign – and some are frustrated with the delay in action.
“I think the legislature needs to take a hard look at why we were so slow on moving this year,” said Karen Pollitz, a member of the MHIP board of directors. She said the insurance plan is still fairly expensive and wants to see the extra money put toward reducing the out-of-pocket costs for low-income patients instead of slashing the hospital tax.
“When [people] do find us, they can’t afford us,” she said. “The money will just disappear and thereÕs no way the problem disappears. If anything, it gets more expensive.”
Senate Committee Finance Chair Thomas M. Middleton (D-Charles County) said he is wary of reducing the program’s funds when Maryland’s uninsured population – now 13.6 percent – continues to grow.
“If we are going to use the money for other purposes it needs to go toward reducing the cost of uncompensated care,” he said, adding it would need to be a temporary reduction. “We need to make sure we are getting the bang for our buck.”
The Health Services Cost Review Commission is considering asking the General Assembly for the authority to turn off the spigot until some of the surplus, which by some state estimates could reach $100 million by June, is spent down.
“Health care dollars are scarce, so when theyÕre not being used or applied you certainly don’t want to be charging people,” said Robert Murray, executive director of the commission, which regulates hospital rates. “This was a pro-patient concept from the get-go.”
The proposed reduction in the levy on hospitals would provide a variable assessment rate up to the current fixed rate, which could differ from year to year based on the program’s needs. MHIP should maintain about $40 million in reserve for claim payments.
Maryland Insurance Administration Commissioner Alfred W. Redmer said the program has not attracted as many enrollees as expected, possibly due to a strong economy, high employment rates and a competitive individual health insurance market. He said he is not opposed to adjusting the fees to “accurately represent the costs of the program.”
“I don’t know that anybody is satisfied that we have any individuals that are uninsured,” Redmer said. “However, there is nobody in Maryland that doesn’t have access to health insurance.”
Del. Peter Hammen (D-Baltimore City), now Chair of Health and Government Operations Committee, said he intends to meet with MHIP board members to “discuss the current status and what they see as problems” in implementing plans to boost enrollment. After further discussion with officials within the Department of Health and Mental Hygiene, the cost review commission will decide whether or not to go forward with the proposal.