Healthcare panel endorses tax extension, prescription drug policy change

A healthcare coverage watchdog group is urging lawmakers to free up funding that can be used to meet a “desperate need” for revenue to help keep people insured.

The Maryland Health Insurance Coverage Protection Commission recommended Tuesday that legislators extend a 1% tax on insurance carriers and that they back legislation making it easier for state officials to lower certain prescription drug costs.

The panel could not agree on other proposals, including a proposed increase in alcohol taxes, but some commission members said they hoped lawmakers would take up the proposals on their own in the coming General Assembly session.

The recommendations come as soaring health costs make it harder for people to keep their healthcare coverage, but another multibillion-dollar budget shortfall — driven in part by higher health costs to the state — makes it harder for the state to help.

“There is a desperate need for additional revenue for 2028 to keep people ensured,” said Vincent DeMarco, president of the Maryland Healthcare for All Coalition and a member of the coverage protection commission.

The 25-member commission, created almost 10 years ago to monitor health coverage under the first Trump administration, was revived this summer after being dormant for several years. DeMarco offered the series of proposals that were considered by the commission during its virtual meeting Tuesday, its fifth meeting since being revived.

Officials, advocates seek funds to soften blow of rising healthcare costs

The commission voted to recommend that lawmakers remove the current 2028 sunset on the state’s “reinsurance program,” a special fund through which insurers are reimbursed for a portion of the costs of patients requiring the most expensive care.

The reinsurance program is funded through a 1% assessment on health insurance policies. To extend the program, Maryland lawmakers would need to pass legislation in 2027 and ask for an extension from the federal government, which could approve or reject the extension.

Instead of extending the expiration date, Del. Bonnie Cullison (D-Montgomery), the commission co-chair,  offered to remove the sunset date completely, making the reinsurance program permanent, so long as the federal government agrees with the measure.

“This is the fund that supports our reinsurance fund which has allowed our insurance premium increases to be lower than those nationally because those very high expensive costs are being supported by this fund,” she said during Tuesday’s meeting.

The commission also voted to recommend that lawmakers allow the state to more quickly reduce the price of some expensive drugs for non-Medicare recipients by piggybacking on the federally negotiated price limits under Medicare.

The proposal would allow the Maryland Prescription Drug Affordability Board to set “upper payment limits” for prescription drugs based on the Maximum Fair Price negotiated between federal officials and pharmaceutical companies to offer lower prescription drug costs for those on Medicare.

Sen. Cory McCray (D-Baltimore City), the other commission co-chair, said that the proposal would allow Maryland to “move in alignment with our federal government.”

“When the price is set at a certain lower price, there is no need for Marylanders to pay a higher price than what’s already been established,” he said in support of the proposal, noting that other lawmakers are interested in the proposed legislation.

Some opposition, other policy options

Not all were supportive of the recommendations approved Tuesday. Commission member Matthew F. Celentano, executive director of the League of Life & Health Insurers of Maryland, was the lone vote against extending the 1% assessment on insurance companies.

Celentano warned that the proposal places a financial burden on just one part of the healthcare sphere, when there should be conversation on how to spread it across other parts of the industry.

“The carriers have to oppose an assessment that only falls on carriers, purely because the costs of this assessment is going to be passed through to consumers,” Celentano said.

He said that there is “no doubt” that reinsurance program significantly helped stabilize Maryland’s insurance market and has had “incredible positive effects” since.

“But we cannot support a 1% assessment just on the carriers,” he said. “And we want to have a broader conversation on what makes sense to spread out that pain, so to say, across a broader segment of the healthcare universe.”

He was also skeptical of the proposal to let the PDAB more quickly approve upper payment limits on drugs affected by the federal maximum fair price negotiations.

Celentano noted that while the board has operated for several years, it has not yet set an upper payment limit on any drugs. The first of those upper payment limits will take effect on Jan. 1, 2027, and only for two drugs covered under the state’s healthcare plans. An expansion of the board’s authority to bring down costs on plans in the private market is still over a year away.

“There is considerable consternation about the impact of upper payment limits and what PhRMA will do in response, and the manufacturers will do in response, and we are worried that they are going to try to balance their balance sheets in drugs that are used by everyday Marylanders,” Celentano said. “The fact that we have not extended an upper payment limit yet to the commercial market, there is continuing analysis done by the carriers, and because of that — we’re not opposing but we would like to abstain.”

Also abstaining from that vote was Del. Thomas S. Hutchinson (R-Middle Shore), who said he needed to “do some homework” on concerns that the drugs under the Maximum Fair Price negotiations may lead to fewer competitive drugs covered under insurance plans.

The panel did not endorse other proposals, although Cullison suggested that lawmakers at least start talking about them.

One of those included a increase in alcohol taxes, with DeMarco suggesting “a dime a drink” excise tax that could bring in more than $200 million a year for healthcare initiatives.

He also wants lawmakers to reconsider a bill from last session that would have prohibited pharmaceutical companies from deducting direct-to-consumers advertising expenses from their state tax returns. He said that would have brought in $5 million to $24 million a year that could have been directed to the Department of Health to support Medicaid eligibility operations and premium assistance.

He is also continuing his effort to support a proposal, debated this year, to make companies that contribute to climate change pay an assessment that would be directed toward healthcare programs.

DeMarco is still hopeful that the other three measures could be enacted by the General Assembly next year. While the incoming Democrat-controlled Congress could work to undo some of Trump administration policies that have contributed to high healthcare costs, he said, that faces the threat of a Trump veto.

“So, we cannot be guaranteed that all of the bad stuff Congress and Trump did in 2025 will be fixed in 2027,” DeMarco said. “We can’t take that chance of that not happening … So we desperately need this money to be raised in Maryland in 2027 so that many thousands of people don’t lose their healthcare coverage in 2028.”