The 2019 Maryland General Assembly began with an activist freshman class of legislators from the 2018 elections, and impending change among legislative leadership in both House and Senate. Senate President Mike Miller continues his cancer treatment, and House Speaker Michael Busch finally succumbed to long-term health problems on the day before Sine Die. While the memorial service for Speaker Busch is being planned, candidates to replace him are jockeying for position and seeking support from their colleagues. One interesting development may be that the House Republican Caucus (42 of the 141 members of the House) has declared that it will vote as a bloc for Speaker. If so, Republicans may be able to negotiate for some leadership positions in return for their support. Meanwhile, by the numbers, there were 2,481 bills introduced this year’s Session, but only 864 bills enacted – a lower than normal percentage of introduced bills (2018 – 3,101 Introduced / 889 Enacted).
Health Insurance Reform – the “Deposit” Plan Becomes a Marketing Plan
One of the primary objectives of consumer advocates in health care for the past year has been an initiative to change Maryland law by adding an individual mandate (similar to the federal mandate that is no longer being enforced) at the State level. Other states have considered this approach. The twist in the Maryland version has been to take the taxpayer penalty that would be imposed on uninsured individuals and, instead of sending that revenue to the State general fund, segregating it in a separate account for use by an uninsured individual as a “deposit” against a future premium payment.
Although the concept was enthusiastically received by many legislators, it ultimately foundered on the practical difficulties of implementing such a system. First, the State Comptroller would have to coordinate the provision of health insurance information from its tax records. Second, the Maryland Health Benefit Exchange would have to create a mechanism to collect and apply an appropriate sum against an individual’s insurance premium. Notwithstanding the enthusiasm for the idea, the administrative, computer programming and other costs associated with its implementation caused it to fail.
HB 814 / SB 802, originally entitled the Protect Maryland Health Care Act of 2019, was therefore transformed into the Maryland Easy Enrollment Health Insurance Program. The object of this completely rewritten legislation is now to identify and reach out to uninsured individuals and encourage them to obtain coverage.
To implement this program, the bill requires the Exchange to establish an Advisory Workgroup. Included in the workgroup will be insurance brokers and agents. Together with JLC Chair Jon Frank, we met last summer with senior personnel at the Exchange, and as we have previously reported, there is a constructive working relationship between MAHU and NAIFA-MD on one hand and the Exchange on the other. We will not wait for the Workgroup to be appointed, but instead we will offer our services to the Exchange so that our members can play a prominent role in this outreach program.
SB 29 – Continuing Education – Major Changes
Another regulator we plan to work with during this legislative interim is Insurance Commissioner Al Redmer. In fact, we proposed an amendment to his SB 29, which changes some important ground rules for recording continuing education credits. Under this bill, there are two important changes. First, the MIA requested, and was granted, a shorter time period for completion of continuing education courses during the licensing period. The primary reason for the bill was that a number of persons holding insurance producer licenses (there are over 35,000 such individuals in Maryland) habitually wait until the last minute to obtain CE credits, which are then filed by the provider with insufficient time for processing prior to license renewal.
The original bill shaved 30 days off the time permitted for taking CE courses during a licensing period. The JLC, joined by IA&B and IIAM, strongly opposed this position. Ultimately, we were able to come to agreement by shortening the period during which CE may not be taken from 30 days to 15 days. The second change that we requested was a requirement that CE providers must file their course completion information within 10 days of completion. Finally, and perhaps most important, the Commissioner must consult with the four producer associations on the adequacy and effectiveness of CE courses in the state and then report his findings to the Senate Finance and House Economic Matters Committees. His consultation will include an examination of the role of producer organizations like ours in providing and reviewing CE. This will give us an opportunity to make recommendations for improving insurance producer CE in our state.
As reported earlier, this bill is the 2019 version of legislation that was introduced late in 2018. A significant change in the 2019 version was the imposition of a fiduciary duty on insurance producers as well as investment advisors. For insurance producers, it would give the Maryland Attorney General jurisdiction over producers’ professional conduct, meaning that producers will have an additional regulator. This bill is the Maryland example of similar legislation introduced in other states, except that the addition of insurance producers is not found elsewhere.
The Maryland Consumers Best Interest Coalition was formed to oppose this legislation whose sole purpose was to defeat the fiduciary standard from becoming law in Maryland. In addition to NAIFA Maryland, we gathered other powerful interests to our cause: The Maryland Chamber of Commerce, NAIFA National, and the American Council of Life Insurers to name just a few. The Coalition concentrated our message and delivered it effectively to Maryland elected officials. Former NAIFA MD President Willie Franklin and current NAIFA MD President Brian Jolles both testified against this legislation in both Senate Finance and House Economic Matters.
Our opponents included a legislative commission that recommended adoption of the fiduciary duty standard, the Maryland Attorney General who would have enforced the new law, and various consumer groups. We not only prevailed by bottling up this bill in Committee, where it could have lived to see the light of day in a future legislative session, we brought the bill to a vote in the Senate Finance Committee, and it was defeated resoundingly. This was a major victory for Maryland insurance producers as well as Maryland financial advisors.
An important component of the individual health insurance market is affordability. JLC members should remember the volatility that has characterized rates in the individual market. A couple of years ago, proposed rates were, by any definition, simply unaffordable. One response from CareFirst, the largest insurer in this market, was to propose an elimination of producer commission for individual health insurance. The JLC worked hard in the past to inform public officials about the importance of the producer role in both procuring insurance for people who need it, and in servicing those policies. With the advocacy of Commissioner Al Redmer, we were able to preserve commission payments.
The affordability problem, however, has not gone away. Maryland has had to develop a revenue source over the last couple of years to provide a reinsurance fund that will keep individual health insurance premiums affordable. This year, a proposal to impose a health insurance tax (HB 258/SB 239) of 2.75% of premiums in all markets was proposed: individual, small group and large group. Commercial insurers strenuously opposed this approach as an unfair burden on the insureds in the group markets. Ultimately, a compromise was reached under which a 1% tax will be imposed for a period of four (4) years on commercial insurers. Before the end of that period, Maryland legislators will have an opportunity to determine whether the next step will be to impose a State mandate, thus reducing the need for such a tax. We will be participating in the legislative analysis that will be taking place on this important issue.
HB 697 / SB 868 – Health Insurance – Consumer Protections and Maryland Health Insurance Coverage Protection Commission
The General Assembly believed it was necessary to restate its commitment to the health insurance model originally established under the federal Affordable Care Act in 2010. It did so in HB 697/SB 868. Originally a 20 page bill, HB 697 /SB 868 eventually became a simple declaration of policy coupled with an extension of the Maryland Health Insurance Coverage Protection Commission through 2020. In addition to monitoring federal enforcement of the Affordable Care Act (ACA) and the litigation associated with it, the new charge of the Commission is to determine how Maryland health insurance consumers can obtain health insurance independent of any federal policy or changes to federal law. In essence, this bill retains the federal model of the ACA, but clearly states the intention of Maryland public officials to act on their own if necessary.
HB 1098 – Health Insurance – Maryland Health Benefit Exchange – Small Business Tax Subsidy
This bill authorizes the Maryland Health Benefit Exchange to submit a State Innovation Waiver application under the ACA (a Section 1332 Waiver), to permit the State to administer the federal Small Business Health Care Tax Credit for small group policies written through the Exchange. Before applying for the Waiver, the Exchange will first determine whether a Waiver is needed for this purpose.
JLC members will recall that, due to restrictive eligibility requirements, the market for subsidized small group coverage is small. While this may not affect eligibility, the JLC will monitor this development closely to determine its effect, if any, on the overall small group health insurance market in Maryland.
This bill creates a new special enrollment period for pregnancy. JLC members know that the open enrollment structure of the ACA created a number of situations where persons needing health insurance were unable to obtain it, such as a job loss. Pregnancy has now joined the list of factors for which coverage will be available in the small group and individual markets for any eligible employee, or the spouse or dependent of an eligible employee, can obtain coverage. The coverage would become effective on the first day of the month in which the pregnancy is confirmed by a health care practitioner.
Long-term Care Insurance
SB 46 – Long-Term Care Insurance – Contingent Benefit Upon Lapse – Application
This Departmental legislation is one of several bills on long-term care. It accelerates the provision of contingent benefits under older long-term care policies that have experienced rate increases from October 1, 2019 to June 1, 2019.
This bill provides an additional benefit to insureds under long-term care policies with a requirement for the insurer to provide to the insured an annual notice with both the insured’s policy form number and the insurer’s customer service telephone number.
Although there were several long-term care bills this year, serious consideration of long-term care will have to wait until next year. Meanwhile, we pleased to report that a report was finally issued under legislation we proposed earlier that created a task force to examine long-term care holistically. The JLC was ably represented on that task force by Sally Leimbach and Melissa Barnacle. We look forward to identifying opportunities for future legislation arising from the work of the task force.