MD: State to Save $829 Million Under National Health Care Reform: Number of Uninsured in State to Be Reduced by Half

National health care reform is expected to save Maryland $829 million over the next decade and provide coverage to nearly 350,000 people — reducing the number of uninsured in the state by half, according to a report released by state officials Monday.

The savings will be achieved by supplanting state spending with increased federal funding for health care programs for those who can't afford it, according to the report from the Maryland Health Care Reform Coordinating Council, which was convened a day after the 2,000-page federal legislation was signed into law in March.

As more people get health insurance, the state also expects to see declines in uncompensated care. The cost of treating the uninsured who seek treatment and can't pay the bill is incorporated into hospital rates paid by private insurers and Medicaid. So as more people get insurance, the state is expected to save.
"National health care reform can only be as successful as our ability to implement it in the states," Lt. Gov. Anthony G. Brown told a group gathered Monday outside the Baltimore Health Department's East Baltimore center, which sees many of the city's 125,000 uninsured.

Brown co-chaired the health reform council with Health Secretary John M. Colmers. Their report sets up the structure for implementing the federal health care legislation in Maryland, most of which is to take effect in 2014.

Many states are starting to examine the impact of reform, said Robin Rudowitz, associate director for the Kaiser Commission on Medicaid and the Uninsured. While all states will gain federal funding, she said, the savings will vary depending on many factors, including the number of uninsured in a state, what programs are in place and how states choose to execute reform.

"All states are doing their own estimate for the overall impact of reform, but it will vary widely across states," Rudowitz said.

Under the reform, the uninsured will be able to get coverage through exchanges where people can shop for insurance with subsidies, while others will get coverage through the expansion of Medicaid, the program for the poor and disabled. Others will qualify for the Medicare health program for the elderly.

Maryland is ahead of the curve in many ways because it has worked to expand coverage to 205,000 people since 2007, including 100,000 children.

The state created incentives to small business owners who offer insurance to employees, extended Medicaid coverage to parents making up to $20,500, and allowed young adults to remain on their parents' insurance plan up to the age of 25. Maryland also has a high-risk pool to cover people with pre-existing conditions.

About 14 percent of Marylanders, or 700,000 people, are currently uninsured. That will drop to about 6.7 percent with national reform, the council believes. Those expected to remain uninsured would be illegal immigrants and those who choose not to be covered, according to the report.

The savings attained through national health care reform will be so great in the initial years that it will offset the extra costs the state will face, including administrative costs to enroll people in programs, according to the council.

But federal funding will drop off over time, so that the savings will peak in 2019 and start to decline in 2020. The council, in its report, warned that state officials should squeeze inefficiencies out of the health care system as it takes on more of the costs over time. Colmers and Brown said they would work closely with hospitals and insurers on ways to bring down costs.

"We have to implement realistic reform and at the same time improve quality of care so we can drive and bend down costs in the next 10 years," Gov. Martin O'Malley said Monday.

The cost analysis was calculated by the Hilltop Institute, a research center at the University of Maryland, Baltimore County. The institute said they used conservative estimates and that costs could change over time.

Kathleen Stoll, director of health policy at advocacy group Families USA, said there is the potential for long-term cost reductions in health care. She said Maryland is smart to examine the issue now.

"They need to be in the game early to think about how they will proceed with implementation," Stoll said. "There is potential for great savings over the longer term, but it will have to be done by making changes that will be good for consumers from a quality perspective and that will also save money."

Many of the components of reform don't go into effect until 2014, including individual mandates for insurance coverage, a Medicaid expansion and the creation of health care exchanges.

But preparing for the implementation of programs will take time. The 12-member Health Care Reform Coordinating Council is to spend the next several months figuring that out.

Brown has said the report is a foundation for how to implement reform. The council established six working groups to study a range of issues, such as how to set up exchanges, set criteria for enrollment and create programs for people who still won't be insured once reform is in place.

A final report is due to O'Malley by Jan. 1.

"This is a very good structure on which implementation of federal reform can be built," said Vincent DeMarco, president of the pro-reform Maryland Citizens' Health Initiative. "Now to get to the substance. Without this structure set up, talking about the substance would have been difficult."


This article was published by The Balitmore Sun on July 26th, 2010 and was written by Andrea Walker.