Drawn from the report, States' Roles in Shaping High Performance Health Systems.

States shape the health system in many ways, influencing key components such as insurance coverage, quality of care, and information and provider infrastructures. This report presents findings from the State Health Policies Aimed at Promoting Excellent Systems project, undertaken by the National Academy for State Health Policy, with support from The Commonwealth Fund. After conducting surveys of multiple agencies in states across the country, as well as review of related literature, this study found that states are pursuing system improvements across the full spectrum of their authority, including health care purchasing, regulation of providers, reporting of performance data, integration of public health with health care approaches, and improving the availability and affordability of health insurance. Despite this activity, this study finds room for states to do much more. Ongoing efforts to track, study and diffuse information on state activities could accelerate adoption of promising polices and practices.

Small employers often lack the bargaining power that bigger firms enjoy when it comes to buying health insurance products for their employees. Maryland is one of several states that regulate the small-group health insurance marketplace by setting a minimum benefit package that insurers competing in this market must offer. In doing so, the state faces difficult choices between competing priorities.

The Maryland Health Care Commission manages the Comprehensive Standard Health Benefit Plan, which sets the minimum standards for benefits, cost-sharing, and premiums in the Maryland small-group market. Approximately 40 percent of Maryland's 127,000 small employers (that is, employers with between two and 50 employees) buy into the nine participating health plans, which provided coverage for 448,000 people in 2005. The standard plan is comprehensive, covering most services, including organ transplants. Insurers must offer modified community rating, meaning a member's premiums cannot be adjusted according to health status or any characteristic other than age and geography. Employers are permitted to buy riders for benefits that go beyond the standard plan, but the additional benefits must enrich the plan.

Standard plan premiums must be set at less than 10 percent of the average Maryland wage. If the value of the standard plan exceeds this limit, the Commission is required to modify the standard benefit plan to meet this criterion. In an environment where health care costs are increasing more rapidly than wages, this creates a tension between affordability and scope of coverage. In 2006, the Commission struck a balance between these two competing concerns by revising the pharmacy coverage standards to essentially maintain catastrophic coverage for generic and brand-name drugs, with a $2500 annual deductible for single coverage, a $5000 deductible for family coverage, and coinsurance allotting members responsibility for 75 percent of drug costs. Employers are still free to enter into riders for more generous pharmacy coverage.

Sources: Maryland Insurance SHAPES survey response, Maryland Health Care Commission Summary of Carrier Experience, Year Ending December 31, 2005: http://mhcc.maryland.gov/health_insurance/financialrpt06.pdf, Maryland's Comprehensive Health Benefit Plan for Small Employers (brochure): http://mhcc.maryland.gov/smallgroup/cshbp_brochure.pdf