Insurance that works

December 11, 2005

The Maryland Health Insurance Plan is one of the state's greatest unknown success stories. It's a government-sponsored health plan for people who are too sick to qualify for private insurance.

Here's how it works. Take a middle-age man with multiple sclerosis who can't get private insurance, for instance. He doesn't qualify for Medicare or Medicaid, and he can't afford the $1,300 monthly cost of medication on his own. Once accepted into the MHIP program, he pays a premium (as well as co-pays and deductibles) as with any other health plan, and his medical needs are covered.

Everybody wins: The sick get medical treatment, private insurers are off the hook, and the pinch on the rest of us is slight. The program is financed by an assessment on hospitals that allows the cost to be shared broadly, sparing taxpayers from the even higher cost of doing nothing at all.

But all's not well with the 3-year-old program. Its biggest problem is that it's simply underused. There are an estimated 45,000 people in Maryland who could be helped by MHIP, but right now, fewer than 8,000 are enrolled. As a result, the program has built up a surplus approaching $100 million. A surplus isn't necessarily bad - an insurer needs to hold money in reserve to cover future costs - but it's troubling that so many thousands of Maryland's uninsured are suffering needlessly when assistance is available.

Part of the answer is for MHIP to market itself more effectively. Too many people don't know about MHIP, yet the program has spent only a modest amount to reach out to its potential customers. And MHIP only recently offered reduced premiums for its poorer clients.

These issues, however, may be symptoms of structural problems. MHIP has a staff of just six employees, which is hardly enough to manage a statewide health plan, even if most of the services are privately contracted. And MHIP is overseen by a nine-member board that is dominated by government and the insurance industry at the expense of consumers.

Ultimately, the program needs greater autonomy. MHIP is tucked into the Maryland Insurance Administration, a state agency that's supposed to be regulating, not running, insurance companies. That has forced unnecessary bureaucracy on a program that ought to be run like a private concern.

The health care crisis is forcing government and businesses to find creative ways to address growing needs with limited resources. MHIP can be a useful tool in that effort - if it's given the chance.

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