Officials, advocates seek funds to soften blow of rising healthcare costs

State officials are scrambling to find funding to cushion the blow on Marylanders’ pocketbooks of skyrocketing healthcare costs and federal changes to the Medicaid program, in hopes that people can still afford coverage.

The search comes as the state faces an anticipated budget shortfall of $2.8 billion or more in the coming fiscal year — but the cost of inaction would be even greater down the road, advocates say.

“The biggest challenges that we are having in Maryland, around the changes … at the federal level, is how are we going to make sure our residents have the healthcare that they need – and that means being able to afford it,” Del. Bonnie Cullison (D-Montgomery), co-chair of the Maryland Health Insurance Coverage Protection Commission, said Friday.

If people can’t afford coverage “what happens then? Typically, and we’ve seen this throughout history, is when people do not have healthcare, they don’t have preventative services,” Cullison said.

“They wait until something gets really serious, and they go to the most expensive healthcare on the planet, which is the emergency room,” she said. “By law, our state systems pay for what’s called ‘uncompensated care.’ So we want to see what we can do to mitigate the fact that we have people losing coverage.”

Her comments came during a meeting Friday of the commission, which is charged with monitoring the impact of federal policy changes on Maryland residents, and mitigating those effects where possible.

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The loss last year of the federal Enhanced Premium Tax Credit meant higher premiums for some Marylanders, who opted for cheaper, less-comprehensive health care coverage for the 2026 plan year.

Still to come are changes to Medicaid in H.R. 1, the budget reconciliation bill, which will impose new registration rules and increased work requirements, among other changes. The state health department estimates that 130,000 Marylanders could lose coverage as a result of the changes, and that some legally present immigrants will also lose access to Medicaid as soon as October.

The state has already taken steps to mitigate some of those challenges. Lawmakers set aside state money to offset the loss of the federal tax credits, but that funding is only promised for this year and into next year, unless the state can find a sustainable source of funding.

The Maryland Health Services Cost Review Commission this summer approved $100 million for two programs that help keep costs down on the individual insurance market. It also approved $25 million to boost reserves in the uncompensated care fund, and another $25 million to encourage preventive health services by supporting primary care.

But more needs to be done, said Vincent DeMarco, a commission member and president of the Maryland Health Care for All Coalition. He urged the commission to endorse funding proposals in time to present them to lawmakers in the 2027 General Assembly.

“The progress they [state officials] are making cannot go forward without additional money,” DeMarco said. “There is a huge funding gap to keep people from losing their health coverage.”

He said one of the highest priorities should be extending the state’s reinsurance program, a special fund that reimburses insurers for a portion of the cost of the most expensive patient care.

The program is funded through a 1% assessment on health insurance policies, but is currently set to end in 2028. Maryland lawmakers would have to approve an extension in the coming legislative session, then ask the federal government for approval of the extension.

Extending it is the minimum, said DeMarco, who believes the assessment rate should be raised to pull in new revenue.

He also suggested that the Prescription Drug Affordability Board, the body tasked with bringing down prescription drug costs, be authorized to automatically reduce those costs for drugs on the Medicare Maximum Fair Prices list.

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Federal officials negotiated with pharmaceutical companies to reduce the cost of 25 prescription drugs for those on Medicare. DeMarco believes that PDAB should be able to adopt those reduced costs so that Marylanders who are not on Medicare can benefit from the savings.

He also endorsed a proposal, debated this year, to make companies that contribute to climate change pay an assessment that would be directed toward healthcare programs.

“Climate changes, global warming hurts health,” DeMarco said. “Sends people to the hospital, increases health costs … This won’t be immediate money, there will most certainly be lawsuits, but it could be big money.”

DeMarco also wants lawmakers to reconsider a bill from last session that would have prohibited pharmaceutical companies from deducting direct-to-consumers advertising expenses off their state tax return. That would have brought in an additional $5 million to $24 million a year that would have been directed to the Department of Health to support Medicaid eligibility operations and premium assistance.

Finally, DeMarco said it’s time to raise taxes on alcohol, suggesting “a dime a drink” excise tax would bring in more than $200 million in new revenue a year for healthcare initiatives.

Other than a few questions, thorough discussions on DeMarco’s proposals were saved for the commission’s next meeting in mid-October.

“This is informational today…. We will have a more robust discussion, consideration of the pros and cons of the proposals,” Cullison said. “We have a lot to think about before our next meeting.”