July 26, 2010

Rising health care costs are expected to erase Maryland’s savings from health care reform; many will still be uninsured

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By Barbara Pash
For MarylandReporter.com

Federal health care reform signed by President Obama this year is expected to save Maryland $829 million in 10 years, but those savings are expected to be wiped out by rising costs.

“I won’t sugarcoat it,” said Lt. Gov. Anthony Brown Monday in releasing a report on the impact of the health care changes. In a decade, “health expenditures in Maryland will exceed the $829 million in savings.”

The health care overhaul passed by Congress is also intended to reduce the ranks of the uninsured. Yet despite cutting the number of uninsured citizens in half, from 14% of Marylanders now to 7% in 2017, there will still be 415,000 uninsured Marylanders in seven years.

Brown and Health Secretary John Colmers, co-chairs of the Health Care Reform Coordinating Council created by Gov. Martin O’Malley, presented their interim report to the governor at a Baltimore health clinic Monday.

The final council report is due in January. Parts of the federal reform do not become effective until January 1, 2014, but “we must have the infrastructure in place by then,” Colmers said.

According to Brown, the steps Maryland has taken towards health care reform even before the federal legislation passed are showing results. These steps included expanding Medicaid eligibility for low-income adults, assisting small businesses with health care coverage, allowing young adults up to age 25 to be covered under a parent’s plan and creating a high-risk insurance pool.

“In the last few years, 205,000 Marylanders became insured because of Maryland reforms,” Brown said.

The federal government has given Maryland $85 million for an insurance pool of high-risk patients, which is money the state government no longer has to spend and whose fiscal impact is reflected in the figures in the interim report. Other components, like increased federal aid for children’s health insurance, may eventually reduce the state’s future health care costs even more.

Brown said that the main savings to the state from the federal health care reform comes from the decreased cost of uncompensated care — care generally given at hospitals and emergency rooms that other patients must subsidize. The council is looking at ways to reduce the expected rise in health care costs through measures such as “increasing access to primary care through patient-centered medical homes, building a health information technology infrastructure and reducing hospital-acquired infections.”

O’Malley took the same tack. “We have to implement health care reform but we have to improve wellness and the quality of care. The only sustainable way [to implement health care reform and cut health care expenses] is to bend down that cost curve.”

After 2020, which is as far as the council’s projections go, “it depends on how well we bend that cost curve” as to the ultimate savings to the state, said O’Malley. He referred to items like reducing redundant tests and increasing the availability of nutritional information.