Md. examines taxes, fees to fund health exchange

Md. examines taxes, fees to fund health exchange

July 16, 2012 | Modified: July 17, 2012 at 1:35 pm

Hayley Peterson

Staff writer – White House/campaign and Maryland politics

The Washington Examiner


The state of Maryland is looking for ways to raise up to $50 million annually through an assortment of taxes and fees to finance the state’s health benefits exchange, an insurance marketplace that the federal health care law requires states to have operational by 2014.

Proposals under consideration include broad-based assessments, such as statewide increases on alcohol and cigarette taxes, as well as targeted levies on patients and providers participating in the exchange, according to Gov. Martin O’Malley’s office.

A state-appointed committee is meeting in Annapolis on Tuesday to decide which proposals should be investigated further by the state’s actuaries. The committee is charged with recommending financing options to the state by Dec. 1.

"We are trying to provide decision-makers with more information on how much revenue could be raised and what the impacts of that revenue are," said Jon Kromm, deputy director of the Governor’s Office of Health Care Reform.

The exchange is expected to cost the state up to $43 million in 2015, and up to $51 million in 2016, according to Maryland’s state-hired actuary, Wakely Consulting Group. The federal government is covering the cost of the exchange through 2014, with the state taking on full funding responsibility on Jan. 1, 2015.

"This [exchange] is an enormous economic positive for the state," Joshua Sharfstein, Maryland secretary of health and mental hygiene, told The Washington Examiner. "So it makes sense to spend money to build it."

He referred to a report claiming the exchange will generate more than $1 billion annually in economic activity for the state, due to an increase in the number of insured needing health services. The report was conducted by the University of Maryland, Baltimore County’s nonpartisan research center, the Hilltop Institute.

"Who gets some of that economic activity?" Sharfstein asked. "We want to understand these revenue sources and their connection to the exchange."

In deciding who will be taxed, Maryland officials are planning to target beneficiaries of the new insurance marketplace, Sharfstein said.

The state wants to steer away from overtaxing members of the exchange because that would disincentivize participation — meaning patients and providers not participating in the exchange will likely be on the hook for some sort of tax or fee.


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