Maryland Holds Down Cost Despite Uncontrolled Growth in Services Outside of Hospitals

With no state regulation on payment for health care services or items not delivered by hospitals—professional care, ambulatory facilities, and prescription drugs—insurers’ costs have trended more steeply. Those costs rose 62.4% over ten years in Maryland, versus 49.2% in the comparison states.

Nevertheless, Maryland’s total cost of care in the commercial insurance sector is below comparison states and has grown more slowly.

Utilization of hospital inpatient services by commercially insured populations has declined more rapidly in Maryland than elsewhere. At the same time, owing to hospitals’ success becoming more efficient, the insurers’ cost for a hospital patient day has trended up much more slowly.

Since 2019, the federal government has explicit goals for controlling the state’s total spending. But it makes hospitals—and no one else—accountable for results.

Maryland Insurers See Fewer Admissions, Lower Prices

Employers and consumers pay for health care in two main forms: premiums to buy health insurance and, for people who use health services, cost sharing in the form of deductibles, coinsurance, and copayments.

As insurers continue to raise patient cost shares, in Maryland, consumers are spared much of the burden thanks to the state’s low rate of growth in hospital spending.

Health Insurance Premiums Don’t Reflect Health Cost Savings

Trends in premium rates insurers charge Maryland customers have not kept track with favorable underlying cost trends in health care services.

Consequently, Maryland insurers pay out a smaller share of premium dollars on health care services (the “medical loss ratio”) than in other states. As a result, and to comply with the Affordable Care Act, Maryland insurers were required to rebate $271 million to customers in just a five-year period.

The findings suggest health insurers have a real opportunity to give Marylanders the benefit of health cost savings up front through lower premiums.