A bill that paved the way to save millions in the state budget is going unused as Maryland faces a crushing budget deficit, several lawmakers said.

Maryland is facing a projected $3 billion budget shortfall that is only expected to balloon in coming years. Gov. Wes Moore acknowledged the financial crisis in an address last month, encouraging state residents not to “give up the ship.”

“We know that Maryland is staring down the biggest budget crisis in the last 20 years,” he said. “Even though we weren’t growing, one thing I did know is that we were spending.”

State lawmakers are expected to prioritize closing the budget gap during the upcoming state legislative session. Aside from spending cuts and tax increases, one potential remedy involves searching for efficiencies or more effective ways of doing business.

Former state Del. Dan Morhaim, a Baltimore County Democrat, said fiscal efficiencies were one of his key focuses during his time in the legislature.

“There’s only three ways to get money in the state,” he said. “You raise taxes, fees or surcharges, which generally are not popular. Some programs need to be enhanced, but I always looked at the third path, which is the efficiencies. Where can you operate better and spend less money?”

Morhaim identified one such budget efficiency in his 2018 bill, HB 1400, which was enacted with bipartisan support. It enables health care insurance pooling in Maryland. Insurance pooling purchases protection in high volume, spreading risk across more people. This lowers overall costs as high-risk individuals are offset by the lower-risk collective.

Pooling also could create a competitive bidding process, further driving down costs.

An estimated 85 different state entities, such as county governments and school systems, purchase separate insurance plans for their employees. By pooling, these groups could decrease administrative costs, create competition and potentially save millions, Morhaim said.

“If health insurance purchases were pooled here, the savings in Maryland could be substantial, about $1,000-2,000 per year per employee without reducing coverage plans — and possibly improving them,” he wrote in a March op-ed for The Baltimore Sun. “Further, administrative costs would go down, from about 4-7% to 2-3% because the burden of purchasing insurance gets spread across a larger base.”

The state of Maryland had roughly 116,000 employees as of October 2024, according to the U.S. Bureau of Labor Statistics. Based on Morhaim’s estimates, insurance pooling could free up an extra $100 to $200 million from the state budget.

Taxpayers Protection Alliance President David Williams described the strategy as a “no-brainer” for legislators looking to get ahead of Maryland’s debt.

“It’s not going to solve the deficit problem, but it’s a step in the right direction because this could save tens of millions of dollars in insurance costs,” Williams said. “Whether it’s the private sector or the public sector, pooling of especially insurance is a great way to save money and still be able to provide benefits to people,”

“The state has to find a way to save money,” he added. “Insurance pooling will do that.”

State Sen. Chris West, a Republican representing Baltimore and Carroll counties, said he plans to introduce new legislation during the 2025 session to create a task force to study health insurance pooling.

“It seems to me this is something obvious we should focus on,” West said. “I mean, let’s pluck the easy fruit from the tree. This isn’t easy fruit. But let’s pluck fruit from the tree, which could genuinely produce significant savings for the state and the counties and the school systems.”

The task force, he said, would be staffed by the state Department of Health. These individuals would work with elected officials to find solutions to issues that could arise by implementing insurance pooling.

Such a bill, he said, would likely be an easy sell for lawmakers on both sides of the aisle.

“I will be surprised if I receive any pushback,” West said. “I would think this would be an obvious bipartisan bill that everybody would want to sign on to.”

Michael Sanderson, executive director of the Maryland Association of Counties, said unweaving the state’s current network of insurance plans could prove challenging.

“I have an intuitive sense that health insurance gets fairly particular, especially with different insurers holding differing networks across the regions of even our one small state,” he wrote via email. “Howard County might have a contract based on their insurer network that serves in their area, and while it would be legal for someone like [Caroline County] to join in that offering, it may not make sense for them to do so due to the regional and network differences.”

“I would not be surprised to see some attention on processes like these as the State delves into a major fiscal problem, but in my experience, most significant public purchasing is already being done with tools that help in the fairly obvious ways to save money,” he added.

Regardless of whether West’s bill passes the legislature, implementing the plan will come down to Moore. Morhaim called on the governor to take the plan seriously and work with relevant groups.

“There’s a power that the governor has,” he said. “I would hope that the governor would enforce or push the counties and the school systems and all the other entities involved, which could include the University of Maryland.”

Williams echoed that sentiment, adding that pooling should have been implemented long before the state ended up in dire straits.

“I have no idea why a commonsense idea like pooling has not taken off in the state of Maryland,” he said. “This was proposed in 2018. This should have happened a long time ago. This should have happened even before there were deficits.”

Representatives of Moore’s office did not respond to multiple requests for comment about whether he would support insurance pooling as a partial remedy to the deficit and why it is not being used.

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