A council, formed by Maryland’s Democratic governor, Martin O’Malley, to anticipate and prepare for federal health reform in Maryland, predicts the state may save between $622 million and $1.04 billion by 2020 from the federal law.
Yet, even with the savings, the Maryland Health Care Reform Coordinating Council is warning that the health care system in Maryland could falter because of increasing costs.
“Our health care system will soon be unsustainable, regardless of these savings, unless we succeed in improving quality while reining in the runaway growth in costs,” said the report from the council, co-chaired by Lt. Gov. Anthony G. Brown and Maryland Health Secretary John M. Colmers.
Maryland “must affirm and strengthen its commitment to immediately begin serious and sustained efforts to bend the cost curve and align incentives toward quality, safety and efficiency,” according to the council’s interim report.
The midpoint for health care reform savings in the state is $829 million, with the benefits to the state budget peaking in 2019, five years after the state health exchanges begin operating. The health exchanges, set to begin in 2014, will provide individuals and small groups with a one-stop location to compare rates and obtain health insurance.
In fiscal 2020, however, Maryland’s health reform savings lessen, as the state appears likely to spend about $46 million more on health reform measures than it would have without the passage of the Patient Protection and Affordable Care Act in March.
Except for fiscal 2013, when a $1 million loss is projected, the council suggests cumulative savings every year through 2019. Annual projected state savings in $15 million in fiscal 2011, $11 million in fiscal 2012, $132 million in fiscal 2014, $354 in fiscal 2015, $604 million in fiscal 2016, $749 million in fiscal 2017, $829 million in fiscal 2018, $875 million in fiscal 2019. The estimates are based on an analysis conducted by the Hilltop Institute, a research center at the University of Maryland Baltimore County.
In fiscal 2020, the savings slide back to $829, a decrease from its peak the prior year, largely because costs associated with health reform begin shifting to states. Those costs measures include administrative and enrollment processes for the exchanges, as well as money to cover the expansion of Medicaid, according to the report.
The council estimates that “substantial savings and new revenues” will be generated from more federal assistance for the Children’s Health Insurance Program (CHIP) and premium assessments on insurance products.
The council also predicts that even with a mandate that every individual obtain health insurance or face a fine that 6.7% of the state’s population will not enroll in an insurance plan. The state has about 700,000, or 15%, of its non-elderly population without insurance now, slightly less than the national average of 17%.
Health reform should trim about 400,000 people from the state’s uninsured rolls, Brown said in a statement on the report.
If, presumably, those people who do not enroll are the healthy ones, who elect to forego coverage to save the money, then overall insurance costs will further increase, as the pool of people covered has fewer healthy people to spread costs among.
To rein in health care costs, the council suggests that the state “expand and leverage” initiatives such as increasing access to primary care through patient centered medical homes, building a health information technology infrastructure and reducing hospital-acquired infections.
“Everyone—consumers, employers, providers, insurers and taxpayers—has a stake in promoting quality and access while improving efficiencies and incentives to reduce costs,” the report said.
Email the author
