MD. HMOS HIKE RATES TO COVER MED-MAL TAX:

As some had predicted, health insurers in Maryland plan to raise their rates to cover a newly enacted two percent tax on HMO premiums. The tax was a focal point of a battle between Gov. Robert Ehrlich and state Democrats during a contentious legislative session last month. Ehrlich vetoed the bill, arguing in part that HMOs would pass the tax on to consumers. The General Assembly overrode the veto Jan. 11.

Two HMOs, Mid Atlantic Medical Services Inc. and Aetna Inc., have informed the state insurance commissioner that they are raising rates March 1. Kaiser Permanente plans to raise its rates on April 1. The state’s largest insurer, CareFirst BlueCross BlueShield, hasn’t filed notice of an increase, but a spokesman told The (Baltimore) Sun that an increase is inevitable.

A two percent rise in premiums could mean increases ranging from about $10 to $15 a month, to be paid by employers, by subscribers, or split between companies and their workers.

House Speaker Michael Busch said he was disappointed that the state’s insurance commissioner didn’t hold a hearing on the increases. Busch said the legislature would look this session at insurers’ pricing, to see if they are shifting costs from large employers to small ones, and at insurers’ rates of reimbursement for doctors. Two days after the override, Insurance Commissioner Alfred W. Redmer Jr. advised insurers that HMOs could pass along the two percent tax, but needed to give 45 days notice.