Governor Wes Moore and the Maryland General Assembly face the perennial funding challenge of balancing the budget and managing revenue while meeting many needs and providing services. He has only three ways to deal with this.
First, cut your spending. But each individual program or project has value, and its proponents will argue that it is worth preserving, or should expand, or both. Additionally, state spending cuts also hurt local entities, as state funds flow to counties specifically for education.
Second, states can increase revenue by increasing taxes, fees, and levies. However, these are usually unpopular for the obvious reason that no one wants to pay more money.
Finally, states can find efficiencies, better ways to operate their businesses that reduce costs without sacrificing needed services.
What if states, counties, and school systems worked together to pool the purchase of health insurance for their employees? This is a big-ticket item that would collectively cost billions of dollars. Currently, more than 22 states have successfully done this in some form. Even small savings can add up to big amounts here.
Currently, Maryland provides health insurance coverage to approximately 99,000 employees. Twenty-four jurisdictions (23 counties and Baltimore City) will purchase health insurance separately for an additional 80,000 people, and 24 school systems will purchase health insurance separately for approximately 130,000 people. Effectively, 49 government agencies each purchase health insurance (one of the most complex and expensive insurance policies that the government or anyone can purchase), and together they serve approximately 310,000 employees and their It is aimed at families.
Since the core concept of insurance is to spread risk, common sense would dictate that buying in bulk would save money. If health insurance purchases were pooled here, Maryland could save significantly, approximately $1,000 to $2,000 per year per employee, without cutting or perhaps improving coverage plans. there is. Additionally, the burden of purchasing insurance is spread across larger locations, reducing administrative costs from approximately 4-7% to 2-3%.
For example, Baltimore County has approximately 8,500 employees and the Baltimore County School System has approximately 8,000 employees. By “piggybacking” on the state's health insurance plan, he could save the county $13 million and the school system $12 million. For Baltimore City, which has approximately 13,500 employees and 7,000 school staff, the savings could reach $30 million annually. These savings accumulate each year.
Therefore, the question arises why this is not done now. In fact, it can happen. In 2018, House Bill 1400 passed unanimously in the House and Senate. This legislation would allow these various entities to purchase health insurance together.
Although it is difficult to change the status quo and review old systems, moving forward with this project is not difficult. Governor Moore should appoint a task force now to quickly complete this work. State budget offices can begin the process by working with counties and school systems to analyze and compare benefits and costs and discuss this with employee groups. Focusing on the details may be tedious and tedious, but it's necessary and will likely yield great rewards.
After all, we are one nation. Money flows from the people to state and local governments and back again. Taxes may need to be raised (or lowered) in some cases, and all programs must be reevaluated to determine which should be reduced, eliminated, or strengthened. At the same time, governments have a duty to operate as efficiently as possible. Group purchasing of health insurance is an easy, common sense way to save taxpayers money while providing better coverage to government employees at all levels across the state. Other states are doing this, so why can't we?
Dr. Dan Morhaim (danmorhaim@gmail.com) served in the Maryland House of Delegates from 1995 to 2019. He is the author of Preparing for a Better End (Johns Hopkins Press).
