Correction: Spending on IT by TPAs in Maryland was estimated at $150 million. Updated 6:35 a.m. ET, Feb. 11, 2011
About 100 Maryland health insurance agents and brokers lobbied members of the Maryland General Assembly today (Feb. 8) for a continued role for the private sector – and them – when the state’s health insurance exchange starts in 2014.
Members of the Health Insurance Buyers and Brokers Coalition of Maryland (HIBBC) took Senate Bill 107 with them, hoping to encourage legislators to embrace the incorporation of language they say would ensure that insurance agents and brokers can continue to help people obtain health insurance in the state.
Gov. Martin O’Malley’s Health Reform Coordinating Council suggested that Maryland should set up a new oversight office and a government body to run the exchange, which they say will save the state $829 million by 2020 and cover about half of the state’s 700,000 uninsured residents.
Sen. John Astle (D-Annapolis), who introduced SB 107, told agents he supported their efforts.
“I am pretty excited about the battle ahead on this bill,” Astle said. “I honestly believe the private sector can do better and cheaper than any government entity.”
The more than 100 agents and brokers who visited legislators asked for support to insert language into the health exchange creation bill that makes the health exchange a nonprofit, non-governmental agency that facilitates the purchase and sale of qualified health plans in the individual market and small-group market, focusing solely on the functions of serving the requirements of the Patient Protection and Affordable Care Act. If the provisions were inserted into the bill, the health exchange would be unable to solicit business from individuals and small groups that already obtain insurance outside the exchange.
At a press conference at the Loews Annapolis Hotel, HIBBC also released a study showing that the state’s private health insurance brokerage and underwriting industry accounts for 20,000 “direct jobs” in Maryland and as many as 51,000 jobs overall in the state.
Jonathan Anders of the Maryland Association of Health Underwriters (MAHU) said the report, prepared for HIBBC by Anirban Basu, CEO of the Sage Policy Institute, tells a more important story: that Maryland’s existing third-party administrators have an infrastructure that could accommodate the exchange.
“We are saying that rather than build something at a time when you have a budget deficit of $1.6 billion, use what’s here and shift that money to providing coverage to people who don’t have it,” Anders told IFA. Maryland has about 700,000 residents who lack health coverage, part of the more than 45 million nationally without health insurance.
Basu’s report estimates that the state’s three TPAs – BenefitMall, Group Benefit Services and Kelly & Associates Insurance Group – have spent more than $150 million on their technology and other infrastructure to bridge carriers and consumers. “That’s actually a fraction of what’s actually been spent,” Basu said.
The report follows a report last year, prepared for MAHU and the Maryland chapter of the National Association of Insurance and Financial Advisors (NAIFA), indicating that Maryland’s TPA system, unique among states, would operate as efficiently or more so than the Massachusetts Health Connector, the model for health exchanges operating since 2006.
Executives of all three TPAs said in spring 2010 that they would welcome the opportunity to operate as the health exchange and were willing to do what was necessary to facilitate that work.
“The state of Maryland could ignore this capacity,” Basu said. “If you try to gut the [health insurance] industry, you do it at your own peril and at great loss.”
The state, seeking ways to cut its budget deficit, would have to invest “tens of millions of dollars in one-time and ongoing expenditures” to build what exists in the TPA system, according to the report.
Insurance agents: Base Md. health exchange on existing private system via IFAwebnews.com .
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