O'Malley's health insurance tax

Another O'Malley hidden tax

(AP Photo)

 

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Previously, I discussed Governor Martin O’Malley’s two hidden energy taxes RGGI and Solar RPS. Get ready for another hidden O’Malley tax--this time on your health insurance premiums.

Part of O’Malley’s proposal to balance the state’s chronic budget deficit is to shift $123 million in Medicaid expenses from the state to hospitals and insurance companies. The Health Services Cost Review Commission put 70 percent of the cost burden on insurance companies and 30 percent on hospitals. Insurance companies will pass on the added costs to customers in the form of higher premiums. In other words O’Malley is balancing the budget on the backs of those who own health insurance.

Over the last decade Medicaid spending has strained the state’s budget. In a report for the Maryland Public Policy Institute, Marc Kilmer revealed the oddity that O’Malley’s Medicaid expansion during a special session—called to solve a billion dollar structural deficit—exacerbated the problem.

In a bit of delicious irony Kilmer notes that advocates of Medicaid expansion used a “hidden tax” argument for expanding the program only to find out their advocacy led to another hidden tax.

I remember sitting in the Senate Finance Committee in 2007 when they were listening to testimony about expanding Medicaid. Many witnesses said that the legislature had to expand Medicaid since paying for health care for those without insurance imposes a "hidden tax" on people with insurance. Can we expect those same advocates to testify before the Senate Finance Committee that this Medicaid expansion needs rolled back now that it is imposing a hidden tax on those with insurance?

Ironic indeed, as the Baltimore Sun article linked above reports:

[Glenn]Schneider, with the Health Care for All! Coalition, said political leaders ought to have handled the budget problem themselves rather than shunting it off to the commission as a "hidden tax." "We shouldn't even be here talking about this," he said.

Of course, Maryland Health Care for All Coalition board members have a knack for producing similar unintended consequences. The group’s president, Vinny DeMarco was a lead lobbyist for the federal Family Smoking Prevention and Tobacco Control Act, which serves to help Phillip Morris sell more Marlboros.

Unintended consequences aside Kilmer argues that band-aid efforts to contain costs are ineffective as subsequent actions—like the 2007 expansion—wipe out those cost containments. The growth of the program is unsustainable and broader reform is needed.

Kilmer’s report outlines several methods to make private insurance more affordable in order to reign in Medicaid growth and spending and relieve pressure on the state budget. In addition to operational reforms implemented by other states, Kilmer argues for scaling back many of Maryland’s 60 mandates on what services insurance companies must provide. The mandates increase costs to consumers and instead of fulfilling their ostensible purpose of providing necessary services, insurance companies lobby to get their services mandated, no matter how necessary they really are. Instead of enrolling more children into the Maryland Children’s Health Insurance Program (MCHP) the state should use that money to help parents purchase private insurance.

For more on the Maryland Public Policy Institute, click here.