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Maryland Considers Imposing State Individual Health Care Mandate

December 19, 2018

The Maryland General Assembly is considering a bill that would establish a “health insurance down payment plan” requiring residents to purchase health insurance or else pay a state tax penalty for being uninsured.

The legislation, introduced by state Sen. Brian J. Feldman (D-Montgomery County) and Del. Joseline A. Peña Melnyk (D-Prince George’s County) on November 20, is a response to the reduction of the Affordable Care Act’s (ACA) individual mandate penalty to $0, which Congress and President Donald Trump implemented as part of their Tax Cuts and Jobs Act in 2017.

The proposed Maryland bill would differ slightly from the federal mandate in that it would allow the uninsured to use the penalty as a down payment for insurance bought on the state’s Obamacare exchange.

The legislation would make Maryland the fifth state or district to adopt an individual mandate. Massachusetts, New Jersey, Vermont, and the District of Columbia have already passed individual mandate laws.

A New Penalty

Legislation establishing an individual mandate was defeated in the 2018 Maryland legislative session. The new proposal would require those who do not have health insurance to pay a fee of $700 or 2.5 percent of their household income, whichever is higher, each year they are uninsured.

Proponents of the individual mandate proposal say they fear the mandate will create a reduction in the number of residents with health insurance, particularly young and healthy individuals, which would cause health care prices to rise for all Marylanders, including those with employer sponsored health coverage.

This increase, they say, would stem from the cost transfer of hospital care for the uninsured to those with coverage. Proponents of the bill claim requiring residents to purchase health insurance would prevent the need for this subsidy increase and thus lower overall health care costs.

Conflicting Claims

In 2018, the number of Maryland residents with health insurance increased by 150,000.

Although proponents of the bill say the individual mandate would continue to increase the number of insured, Twila Brase, president of the Citizens’ Council for Health Freedom and a policy advisor to The Heartland Institute, which publishes Health Care News, says the proposed individual mandate would not help people gain access to health care.

“Just because everyone is covered does not mean they can access care,” Brase said. “Especially under skyhigh deductibles coupled with sky-high premiums.”

Governor Remains Skeptical

Maryland Gov. Larry Hogan opposed the Obamacare mandate and says he’s against a state-level mandate, too.

“The governor favors incentives over penalties” and would oppose an individual mandate in Maryland, Hogan spokeswoman Amelia Chassé said.

Hogan signed into law the reinsurance program Maryland lawmakers passed in the 2018 legislative session in April 2018. That legislation provides backup insurance for insurance companies to help cover the costs of high-risk patients.

Although Maryland lawmakers say the individual mandate bill is intended to decrease health care costs, a state-level individual mandate would have the opposite effect, says Brase.

“Requiring residents to purchase health insurance not only violates personal freedom but also increases health care costs for all,” Brase said. “Nothing justifies an unconstitutional mandate.”

Nicole Staley (Nicole.staley24@ gmail.com) writes from Pensacola, Florida.

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