Once phased in, the plan would raise charges for commercial insurers and their customers by about $350 million a year and increase their price for a typical hospital admission by $900 — in addition to underlying health-care inflation.
Negotiations are expected to take several more weeks. Maryland officials, including Health Secretary Joshua Sharfstein, are talking about submitting a plan to the Department of Health and Human Services by mid-September.
The HHS would have to sign off on the plan along with Maryland rate regulators.
“If you look at the rest of the U.S. today, Medicare and Medicaid as federal payers are paying a lower share of cost than they do in Maryland, and the private sector is paying a higher share of cost in the rest of the world than they do in Maryland,” said Carmela Coyle, chief executive of the Maryland Hospital Association. “We think it’s time to rebalance.”
Critics call the proposal a tax on business that could jeopardize access to coverage and let Johns Hopkins Medicine and other hospitals avoid the kind of cost cutting that sector faces in other states.
“It brings Medicare costs down, so it gives something” to federal officials seeking price relief, said Barry Rosen, a Baltimore lawyer who works for insurers. “It sure raises the price of care to people in Maryland.”
The debate focuses on Maryland’s unique, decades-old system of setting all hospital rates for all payers.
The federal government lets the state control Medicare prices only as long as the program’s cost per admission rises no faster in Maryland than in the rest of the nation.
Now that the limit is close to being reached, Maryland policymakers are talking to the HHS and hospital and insurance industry leaders about sharply cutting rates for Medicare as well as those for Medicaid, which has been straining the state’s budget.
But instead of making hospitals absorb the reductions, those officials are talking about forcing commercial insurers, self-
insured businesses and privately insured patients to make up the difference.
The change could come as early as next year. Even if the hospital association doesn’t get everything it wants, charging private payers more would shift the burden of expense that has held constant in Maryland since the 1970s.
“The question is: Is it equitable to push more cost onto the private sector?” said Jack Keane, a consultant for CareFirst BlueCross BlueShield, Maryland’s largest health insurer, who sits on Maryland’s hospital rate-
setting body. “And to what extent can the insurance market in Maryland, by which I mean the people who live in Maryland, afford it when they are already losing coverage at a rapid rate?”