Maryland in Special Session To Consider Proposal To Expand Medicaid Eligibility, Subsidize Small Businesses

Maryland Gov. Martin O'Malley (D) on Thursday announced a proposal to increase eligibility for Medicaid and subsidize small businesses that provide health insurance to their employees, the Washington Post reports. The General Assembly will consider the proposal during a special session on the budget that starts Monday (Rein, Washington Post, 10/26).

The proposal would expand coverage to an additional 100,000 Maryland residents, out of the 800,000 state residents who are uninsured. Under the proposal, the state would expand the Medicaid income threshold for adults from 40% of the federal poverty level to 116% of the poverty level (Smitherman, Baltimore Sun, 10/26). The increase would occur over four years, with Medicaid first extending the higher income eligibility level to parents, and later to childless adults.

In addition, the proposal would give insurance subsidies to employees with annual incomes up to $50,000 who work at companies that have as many as nine employees and do not offer health benefits (Washington Post, 10/26). The subsidies would be up to $1,000, depending on the amount employees contribute to their insurance premiums (Baltimore Sun, 26). The state also would provide subsidies to about 4,000 small businesses in the state to encourage them to continue offering employee health benefits. Employees with chronic illnesses would be eligible for discounts on their deductibles if they enroll in wellness programs under the plan (Washington Post, 10/26).

The proposal also would allot $10 million to improve the quality of health care technology used statewide, which is intended to improve care and save money by reducing inefficiency. In addition, O'Malley on Thursday signed an executive order to create the Health Quality and Cost Council to explore other health initiatives (Baltimore Sun, 10/26).

Cost
The proposal is expected to cost $85 million in state general funds in fiscal year 2009. Costs would increase to $188 million in 2010, $216 million in 2011 and $250 million in 2012 (Witte, Washington Times, 10/26). Total annual cost of the program is estimated at $675 million, including federal matching funds, according to Health Secretary John Colmers (Washington Post, 10/26). Implementation of the plan will depend on the availability of funding (Washington Times, 10/26).

The state would fund the proposal through a $1-per-pack increase in the cigarette tax and a "reshuffling" of the state's method of reimbursing hospitals for providing charity care, according to the Post (Washington Post, 10/26). In addition, about $75 million of a $100 million surplus in the Maryland Health Insurance Program would be used to fund the Medicaid expansion (Washington Times, 10/26).