Broad array of funding recommended for Health Benefit Exchange

By Glynis Kazanjian

The Health Benefit Exchange Board recommended Monday a broad based funding approach to pay for a federally mandated state health insurance program, now estimated to cost up to $30 million in 2014 and $60 million by 2016.

“The board is in agreement there should be some sort of a transactional fee, a broad based fee, and funding for the exchange that needs to come from multiple places to ensure sustainability and stability,” said Rebecca Pearce, Health Benefit Exchange executive director.

In a report, the board recommended dual fees for health insurance carriers participating in the exchange — a transaction fee, comparable to a broker’s fee, and a general membership fee. Licensing fees for physicians and general assessments on industry participants including hospitals, nursing homes and surgery centers were listed as additional financing options. And Medicaid would provide some funding.

A tobacco tax advocated by an exchange advisory committee member, is also not out of the question. The Health Exchange Board is expected to take up that issue next week when it meets on December 20 for its last board meeting of the year. However, the heavy lifting of how to fund the exchange will be left up to the state legislature.

“[The tobacco tax] was an option put on the table for the legislators,” Pearce said. “Ultimately this is not our decision to make. We’re not going to come out necessarily with a formula to the legislature to say this is how we think we should come up with our money. It is for us to say these are the philosophies that we think need to be funded, and it’s up to them to make that decision.”

The exchange was established through the Maryland Health Benefit Exchange Act in April as part of a federal mandate created by the Affordable Care Act of 2010. The exchange would serve as a statewide broker for health insurance plans for small businesses and individuals.

Final recommendations of how the exchange will be structured and financed are due to the governor by Dec. 23.

The Health Benefit State Exchange is estimated to cost $24-$30 million in 2014, $38-$51 million in 2015 and $44-61 million in 2016, according to Wakely Consulting Group, budget advisors for the exchange board.

There are 730,000 uninsured residents in Maryland. The board estimates in 2014 about 170,000 people will be enrolled in the exchange.

About The Author

Len Lazarick

Len Lazarick was the founding editor and publisher of and is currently the president of its nonprofit corporation and chairman of its board He was formerly the State House bureau chief of the daily Baltimore Examiner from its start in April 2006 to its demise in February 2009. He was a copy editor on the national desk of the Washington Post for eight years before that, and has spent decades covering Maryland politics and government.

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