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Md. Insurance Chief Criticized

HMOs Allowed to Assess Consumers for New Tax Costs

By John Wagner
Washington Post Staff Writer
Thursday, January 27, 2005; Page B01

Leading Democratic lawmakers yesterday blasted Maryland Insurance Commissioner Alfred W. Redmer Jr. for allowing HMOs to pass on to their customers a tax imposed by the legislature last month, with one prominent senator calling for his resignation.

Redmer, an appointee of Republican Gov. Robert L. Ehrlich Jr., is "a lap dog for insurance companies" and should step down, Senate President Thomas V. Mike Miller Jr. (Calvert) said at a news conference in which he was joined by House Speaker Michael E. Busch (Anne Arundel) and a half-dozen other prominent Democratic legislators.

_____From the Post_____
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Ehrlich Blames Democrats for 'Damaging' Relations (The Washington Post, Jan 27, 2005)
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Intimidation of Trial Witnesses Called 'Terrorism' (The Washington Post, Jan 26, 2005)
Full Report

Ehrlich later accused Democrats of trying to divert attention from their support of the tax, and Republican lawmakers said they would seek repeal of the new levy in coming weeks.

"We kind of look at it as a legislative temper tantrum," said Senate Minority Leader J. Lowell Stoltzfus (R-Somerset).

Democrats included the 2 percent tax on HMO premiums in a medical malpractice bill passed during the special legislative session in December. Ehrlich vetoed the bill, but the Democrat-controlled legislature overrode the veto Jan. 11.

"What they're reacting to is they own it, and they don't like it," Ehrlich said of the HMO tax. "We warned them repeatedly. . . . Businesses tend to pass along the cost of doing business. This is not some new economic principle."

Democrats accused Ehrlich of politicizing Redmer's office, which is chartered as an independent agency.

On Jan. 13, two days after lawmakers voted to override Ehrlich's veto, Redmer issued a bulletin announcing that HMOs could pass along the cost of the tax merely by sending in a letter announcing their intention. Busch said that Redmer should have had public hearings to determine whether such a move is justified.

Two of the state's large HMOs, Mid Atlantic Medical Services and Aetna, have announced they will raise rates March 1. Kaiser Permanente plans to do so April 1.

Though he stopped short of calling for Redmer to step down, Busch said he was "very, very disappointed." He said Redmer should be held accountable for what Busch called a pattern of favoring insurance companies over consumers.

Redmer said yesterday that the expedited process he used mirrored one developed by his predecessor, an appointee of Gov. Parris N. Glendening, a Democrat.

"We used that as a starting point," said Redmer, a former minority leader in the House of Delegates who was appointed insurance commissioner in June 2003.

Redmer said the Jan. 13 bulletin was issued in response to numerous calls from HMOs to his office, seeking guidance on how to raise their rates to reflect the new tax.

"I never wrote to an HMO," he said. "I never called an HMO."

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