Maryland Health Benefit Exchange seeks $718.7 million; reinsurance, young-adult subsidies drive increase

The Health and Social Services Subcommittee heard a fiscal 2026 budget presentation on the Maryland Health Benefit Exchange (MHBE) that showed the agency’s allowance rising by $31.6 million, or 4.6 percent, to $718.7 million.

Victoria Martinez, presenting the Department of Legislative Services (DLS) budget analysis, said most of the MHBE budget—about 83 percent—covers reinsurance payments while other line items include a young-adult subsidy (4 percent), information technology (6 percent) and administration (7 percent). Martinez presented DLS’s recommended changes, including a suggested $267,000 reduction to operating expenses and language making $13 million of the young-adult subsidy contingent on legislation extending the subsidy beyond calendar 2025.

The exchange’s executive director, Miss Eberly, told the subcommittee MHBE provides enrollment services through the Maryland Health Connection platform and said the exchange had a record new enrollment of nearly 250,000 people in the 2025 plan year. “So in essence, we have a small budget on which we provide services to 1 in 5 Marylanders,” Eberly said, describing the exchange’s limited administrative funding and the larger federal pass‑through dollars that support reinsurance rather than core administration.

Nut graf: Why it matters

The state reinsurance program lowers premiums in the individual market by paying a portion of carriers’ claims; the program’s size makes the exchange’s fiscal outlook sensitive to federal premium subsidy policy and to enrollment changes. DLS and MHBE told lawmakers the reinsurance fund is expected to remain solvent through the end of the current waiver period (December 31, 2028) under current assumptions, but federal actions—specifically the expiration of enhanced premium tax credits—could reduce pass‑through funding and affect solvency and enrollment.

Key facts and provisions

- Budget totals: DLS reported a fiscal 2026 allowance of $718,700,000, a $31,600,000 increase from the prior year working appropriation. Exhibit highlights presented by DLS show a roughly $30,000,000 increase in reinsurance payments as the largest change.

- Reinsurance: The state reinsurance program, established in 2018, is funded with federal pass‑through dollars and a carrier assessment. MHBE and DLS said premiums have increased for 2025 compared with 2024 but remain lower than levels before the reinsurance program.

- Young‑adult subsidy: Fiscal 2026 includes $26,000,000 for the young adult subsidy program. DLS recommended $13,000,000 of that be made contingent on legislation extending the subsidy beyond calendar 2025; MHBE said it would accept that contingent language. Committee members were told Senate Bill 5 and House Bill 297 had passed initial committee and chamber steps and were advancing toward the opposite chamber at the time of the hearing.

- Personnel and consumer assistance: MHBE plans six new regular positions in fiscal 2026 to support consumer assistance. DLS noted these positions were funded in fiscal 2025 using available resources and suggested the operating expense reductions in its recommended actions.

- Audit findings and corrective actions: DLS reviewed a January 2025 legislative audit of MHBE. The audit contained eight findings related primarily to Medicaid eligibility and MHBE fund controls; MHBE reported corrective action completed on two findings and disagreed with four findings. MHBE told the subcommittee it had corrected findings identified before the audit’s publication and that finding 1 and 3—relating to Medicaid eligibility—remained open.

What lawmakers asked and MHBE’s answers

Committee members pressed MHBE on risks tied to federal policy. Eberly explained that the enhanced premium tax credit enhancements implemented during the pandemic expire December 31, and Congress must act to extend them; the exchange has been educating federal and state delegations about the possible impacts to enrollment and reinsurance funding. Eberly said MHBE projected the reinsurance program could remain solvent through 2028 even without the expanded tax credit, “providing nothing is taken out of it.”

On appeals and enrollment continuity, Eberly described interactions with carriers after January file errors caused some terminations. She said carriers and the Maryland Insurance Administration worked with MHBE; affected customers were reinstated and, in at least one case, the carrier paid January premiums for those members.

Ending

Lawmakers concluded the MHBE budget hearing after questions about audit follow‑up and federal funding risk. DLS recommended committee narrative requiring an annual report on reinsurance program costs and forecasts and conditional language for a portion of the young‑adult subsidy; MHBE signaled it would cooperate with those requests.