Maryland is still ahead of other states in implementing health care reform, but a few key steps remain, according to officials in charge of the process.

Rebecca Pearce, Maryland Health Benefit Exchange executive director, told members of the Joint Committee on Federal Relations this week that the exchange, called Maryland Health Connection, will be up and running in October 2013, following another round of legislation in the General Assembly.

Individuals and small businesses will be able to go to the Maryland Health Connection website and choose from any number of private insurance plans or a state-selected plan, find tax credits and determine eligibility for subsidies and Medicaid. Pearce estimates between 145,000 and 180,000 people will enroll in the exchange in the first year.

Before that happens, however, the General Assembly has to pass one last major piece of legislation — a bill that outlines how the exchange is going to be financed once it is active.

By law, the health exchange must be self-sustainable by 2015. So far, the federal government has given Maryland $157 million to develop the exchange, most of which has gone into designing the computer systems that will manage the operation, Pearce said. No state funds have been spent putting the exchange together.

A 17-member committee composed of health advocates, insurance and health care providers that is looking at possible financing schemes is considering a report by Wakely Consulting Group, which identified three possible ways to pay for the exchange.

While officials do not yet know the size of the Maryland Health Connection’s budget, the Wakely report estimated that it will cost up to $42 million a year to run.

The money could come from a combination of places. One option is to combine fees from health insurance carriers, based on a percentage of premiums collected from individual and small-group plans, with similar fees from their large-group premiums.

Another option is to combine the premium revenue with a tobacco tax or similar broad-based funds from public sources.

Deciding on the appropriate mix of funding sources is crucial, said Carolyn A. Quattrocki, executive director of the Governor’s Office of Health Care Reform.

“It’s important that we get it right and put in place revenue mechanisms that are sufficient before we get cut loose, so to speak, from federal funding,” Quattrocki said.

Before insurance coverage through the exchange takes effect in January 2014, changes to insurance market regulations and to the state’s Medicaid statute must occur, Quattrocki said.

The committee will meet in mid-November to draft a final recommendation, which will be presented to the governor and the General Assembly by December. Lawmakers are expected to pass legislation based on the final recommendation during the 2013 regular session.

The Wakely report is available on the Department of Health and Mental Hygiene website, and public comments are being accepted through Monday.

hnunn@gazette.net