The COVID 19 pandemic caused material changes in the annual session of the Maryland General Assembly, as it has with all aspects of our lives. The volume of legislation was typical, with more than 2,300 bills introduced and a little over 800 passed. All aspects of legislative activity this year, however, were virtual, including conducting legislative business in the House of Delegates from two different locations. The social distancing requirements that continue to impact our daily lives applied equally to our State legislators. It is surprising that the legislature accomplished its work (only the budget bill is required to be passed each year) without a COVID outbreak and with no interruption in its ordinary course of business.
That said, while COVID legislation was a major concern of legislators, so too were other issues, such as a sweeping reform of the laws governing police conduct. Health insurance bills – always a focus of legislative attention – remained present in 2021; however, we did not see a return of legislation that would have imposed a fiduciary standard on financial advisors and insurance producers. On that issue, we have been contacted by the Maryland Insurance Administration for our views on a possible MIA regulation of that subject. No State regulation has yet been published. Stay tuned for further developments.
One issue that we expected to be important coming into the 2021 session turned out to be a non-issue: the State budget. Last July Governor Hogan was prepared to slash as much as $600 million from a $46 billion budget. Aided by the massive federal stimulus for individuals, businesses, and State and local governments, projected deficits have become surpluses. In Maryland, the Governor added $1 billion to the State budget early in the session, followed by another ½ billion dollars from the legislature. The final result was a $52 billion budget with a fully funded State rainy day fund of $1.1 billion and sufficient balances in State accounts to reasonably assure no projected deficits for the next two years. Coupled with stimulus payments made to individuals, these monies have produced a significant increase in State revenues arising from a recovering economy.
The following summary of legislative initiatives should be of interest to NAIFA-Maryland members:
The pandemic changed our lives in many ways. One change was the rapid acceleration of the provision of health care services through telehealth.
A major point of contention between payors (insurance companies) and providers is whether health care services are delivered within a provider’s scope of practice and that the provider maintains a current, unrestricted license. This becomes especially important when the provider is not located in Maryland and may not be subject to Maryland statutes and regulations. A related issue is the need to develop processes by which fraud can be detected in the delivery of telehealth services.
For a limited period of time, the definition of “telehealth” is expanded to include audio-only telephone conversations between a health care provider and patient resulting in the delivery of a covered, billable health care service. This includes mental health treatment. Deductibles and copayments will apply.
By December of 2022, the Maryland Health Care Commission is required to submit a detailed report to the legislature on the impact of these changes.
In recent years, the General Assembly has addressed widespread publicity about data breaches by imposing new requirements on businesses for the protection of personal financial information. This year’s legislation imposed additional security procedures on private businesses that were considered to be an onerous burden on businesses. Coupled, perhaps, with the universal burden of dealing with COVID 19, the legislature was unwilling to add new duties to businesses who may suffer data breaches.
For those JLC members who are multiline agents, this and other bills sought to eliminate the use of credit in automobile insurance rating. Always a highly controversial issue, because of the perception that the use of credit may be a proxy for otherwise impermissible racial discrimination in automobile insurance rating, this bill passed the House of Delegates but failed to pass the Senate.
As introduced, this highly controversial legislation would have placed heavy burdens on all businesses deemed “essential employers” for the benefit of their “essential employees.” While some of the more onerous provisions, such as hazard pay, were removed during the legislative process, others were changed. As enacted, HB 581 authorizes the Governor or federal or State agencies to name essential employers if they are critical to remain in operation during an emergency.
There are additional, material requirements in SB 581, imposed on essential employers to ensure the safety of essential employees, including the provision of working conditions that comply with (presumably new) safety standards. Essential workers may also refuse to perform an assigned task. If a communicable disease giving rise to the state of emergency is found at a worksite, there are additional proactive requirements for the employer to minimize transmission.
We are pleased to advise the passage of this legislative initiative, with support led by NAIFA Maryland, joined by MAHU and IA&B. JLC members will recall the beginning of this journey in 2017 with the introduction by Senator Brian Feldman of a bill to study the subject of long-term care planning and education. Note the focus on planning as distinct from the long-term care insurance – another subject of great concern for JLC members who provide this product to their clients.
The completed study had a number of recommendations intended to promote greater awareness among Marylanders of the need for long-term care planning. Senator Kathy Klausmeier chose the most important of these recommendations for legislation in 2020. While that bill did not cross the finish line in time, we entered the 2021 session with Senator Klausmeier again sponsoring the bill in the Senate, and Delegate Ariana Kelly doing so in the House Health & Government Operations Committee. This year we were successful, and in this process, we have raised legislative awareness of the importance of long-term care planning. We will continue to work with our champions – Senators Feldman and Klausmeier and Delegate Kelly – to serve as their trusted advisors in shaping Maryland public policy on this important subject.
HB 634/SB 621 - Association Health Coverage Plans – Did not pass
This legislation is known in Annapolis as a “hardy perennial,” which is a bill that comes back each year but does not pass. Hopefully, that will continue to be the case. Association health plans were effectively eliminated with the passage of small group reform in 1993, although there have been regular efforts to restore them. The problem, as we always explain to legislators, is that the Maryland small group market, while stable, is not large. Association health plans could be used as a form of adverse selection to remove younger, healthier participants in the small group pool. (To compare and contrast, see summary of HB 780 below).
Another example of a hardy perennial, this subject invariably crosses the line between the delivery of faith-based services, which are not regulated, and health care services, which are regulated. As drafted the bill would have added “health care sharing ministries” to a long list of services and activities that are exempt from regulation under Maryland insurance laws. Such services include, for example, self-funded student health plans and religious publications on this subject. The broad exemption sought under the bill for health care sharing ministries raises the same objection that applies to association health plans. For this reason, we opposed this bill, and it did not pass.
JLC members who have been in the industry for at least 10 years will remember the debate surrounding the Affordable Care Act, and a term that was popular at that time: the “young invincibles.” This term referred to young persons who are less inclined to purchase insurance under the belief that they don’t need it. As we all remember, the original notion of an individual mandate was not adopted, leading to substantial litigation and legislation at the federal level.
Maryland was fully committed to the Affordable Care Act, and it pursues Massachusetts in its zeal to reduce the number of uninsured citizens as low as possible. The “young invincibles” phenomenon continues to act as both a brake on growth in the individual market and as a detriment to greater profitability in that market.
To address this situation, this legislation was enacted. It establishes and implements a state-based young adult health insurance subsidies pilot program, under which certain of these “young invincibles” who are not otherwise eligible for subsidies under federal law would receive premium relief from the State.
Up to $20 million has been committed for this pilot program, much of which comes from a reinsurance assessment paid by commercial carriers. It is possible that this may encourage other carriers to participate in the Maryland Health Benefit Exchange – United Health Care reentered this market a year ago.
SB 210/HB 508 - COVID-19 Claim - Civil Immunity – Did not pass
Legislation was introduced early in the session that would provide civil immunity from liability for a person facing a negligence or similar claim from an individual who contracted a communicable disease and alleges responsibility of others, such as a landlord. Businesses strongly supported this legislation; however, it failed to move in either House or Senate.
This bill is an example of a broader interest among some states for legislation promoting racial and social justice. Its subject is “State Benefits,” defined in the bill as a State contract, State tax credits or State capital grant funding, each of which totals $1 million or more. Eligibility for these State benefits is conditioned upon an entity demonstrating membership of underrepresented communities in its senior leadership, or support for underrepresented communities in its mission. We are informing the JLC about this legislation for any members, or their clients, who may be seeking to do business with the State of Maryland in the future. This legislation has passed and will become law.
SB 327 - Maryland SAFE Act – Passed
Maryland legislators acted quickly and decisively to prevent the financial exploitation of vulnerable (susceptible) adults in this legislation. It creates a new, legal cause of action – meaning a method of suing a violator of this law. While the bill describes a number of practices that are impermissible, its general impact is to prohibit the financial exploitation of persons whose ability to manage their own finances is limited or nonexistent. While certain JLC members supported the intent of the bill, they advised the legislative committees of the extensive framework of laws and regulations, both federal and State, currently governing the conduct of insurance agents and financial advisors. Our point in raising this subject was to demonstrate that there is often ample consumer protection currently in existence at the State and federal level.
Bryson F. Popham, P.A.