Maryland bill to create single-payer system excludes insurance agents

The Maryland General Assembly has scheduled a March 9 public hearing on a bill that would take a far more aggressive approach toward health reform in the state than passed at the federal level last year.

The bill, SB388, would create a single-payer system to administer all health insurance coverage in Maryland. The public hearing is planned before the Senate Finance Committee, beginning at 1 p.m. No action by the Maryland House of Representatives has been scheduled.

The 27-page bill makes no mention of insurance agents and brokers, and if approved would likely eliminate the need for them. The language of the bill doesn’t clearly explain how those services would be performed.

Eleven senators are sponsoring the bill, the Maryland Health Security Act of 2011, which would establish the Maryland Health System to provide health care services to all residents of the state under a system not dependent on employment. The program would be funded by the state and permit people to access any approved health care provider in the state.

If approved, according to the bill’s text, the program would serve as the state’s effort to meet the federal law’s requirements.

A grassroots group, Healthcare-Now! of Maryland, is pushing for the bill, arguing that the Canada-style approach to health care would eliminate the profit motive of insurers and lower overhead, according to the group’s website.

Under the provisions of the bill, a Health Policy Board would establish a comprehensive health package, including all medically necessary care, preventive care, integrated health services, mental health services, substance abuse treatment services, home- and community-based services, dental services, basic vision services, and prescription drugs and devices without any co-insurance, deductibles or co-payments.

The state’s three existing third-party administrators – BenefitMall, Group Benefit Service and Kelly & Associates Insurance Group – have spent more than $150 million on developing technology to administer the current health system in the state, according to a study performed by Baltimore economist Anirban Basu for the Health Insurance Buyers & Brokers Coalition of Maryland. The group advocates building on that system as a means of saving the state money and avoiding unnecessary duplication.

The bill, which does not include a budget statement, mandates that the new health system develop a plan to decrease administrative costs for the system to 10% or less of the total health care expenditures of the program within the first five years, and to 5% or less of its total expenditures within the first decade.

If the bill is approved an administrative board, the Maryland Health System Fund Board, would administer funding from the Maryland Health System Trust Fund, according to the test of the bill.

With a state budget deficit of more than $1 billion, the proposed expansion of health coverage from the state for all residents seems like a longshot in Annapolis this year.

The single-payer approach would be the most extreme attempt at health reform, exceeding the provisions of the federal Patient Protection and Affordable Care Act passed last year. That law, which states are now implementing while federal courts continue to weigh its constitutionality, establishes state-based health insurance exchanges where individuals and small business owners will be able, starting in January 2014, to compare policies and buy coverage.

The bill also conflicts with the three bills introduced on behalf of Gov. Martin O’Malley, which seek to create the administrative infrastructure to develop the health exchanges in the state. Those bills are the result of work of the Maryland Health Reform Coordinating Council, which met last year and wrestled with how best to implement federal health reform in the state.

If the single-payer bill passed in Maryland, it would make irrelevant the ongoing court debate over the federal law. So far, three courts have found the law, passed in March 2010, legal, while two other courts, one in Virginia and one in Florida, have ruled the individual mandate, forcing every American to either enroll in a health insurance plan or pay a fine, unconstitutional.

More than 20 challenges have been filed in conjunction with the federal law and the lower court rulings have been appealed, setting the stage for an eventual review by the U.S. Supreme Court.