Md. Democrats Hit Redmer for HMO Rate Hike OK; Redmer Points to Legislators’ Approval of Tax

January 27, 2005

Maryland Democratic legislative leaders have castigated Insurance Commissioner Alfred Redmer for his blanket approval of a 2 percent increase in HMO premiums, saying he is playing politics with the issue to advance the political agenda of the Ehrlich administration.

“He’s turned a nonpartisan office into a very partisan office,” said Senate President Thomas V. Mike Miller, calling for Redmer’s resignation.

“He just continues to side over and over again with the insurance companies” instead of consumers,” Miller said at a news conference with other key Senate and House Democratic leaders.

The Democratic lawmakers’ anger is focused on a bulletin Redmer posted on the Maryland Insurance Administration’s Web site and sent to health insurers just two days after the General Assembly’s emergency session last month. During the two-day session, the legislature overrode Gov. Robert Ehrlich’s veto of a medical malpractice bill that required HMOs to pay the 2 percent premium tax paid by all other insurers.

Redmer told insurers they could pass the tax on to their customers without getting customary prior approval of the Maryland Insurance Administration simply by sending him a letter.

“The letter submitted to the MIA will constitute the rate filing, which will be deemed approved upon receipt by the MIA,” the bulletin dated Jan. 13 said.

On Wednesday, in a conference call with reporters, Redmer said he since has changed that policy. Insurers now must wait for a written response from the administration before they’re officially approved.

“We went the next step to say sending us notification is not enough,” Redmer said, speaking from his hotel room in Phoenix, where he was attending a national insurance commissioners convention. “You need to notify us, and we will respond to you with written notification saying you’ve been approved.”

Three HMOs — Mid Atlantic Medical Services Inc., Aetna Inc. and Kaiser Permanente — are raising rates on either March 1 or April 1. CareFirst BlueCross BlueShield hasn’t filed notice of an increase, but a spokesman said higher premiums to make up for the tax are inevitable.

Democrats said Redmer’s bulletin was in effect an invitation to HMOs to increase rates. They also argued at the news conference that the commissioner did not comply with the state law that requires insurers to justify the need for a rate increase.

“He let them line their pockets at the expense of consumers,” House Speaker Michael Busch said, adding later: “There might be justification to pass this along, but why not hold a public hearing?”

Redmer said, ‘”n speaking with my skilled longtime public servant management team, we have not identified any reason at this point to bring anybody in for a public hearing.”

HMOs ultimately will pass on the 2 percent tax to consumers, Redmer said, adding that the General Assembly recognized that fact during the emergency session when lawmakers declined to amend the bill to prohibit that action.

“I believe that action cast in stone the legislature’s implicit approval and recognition that it would utlimately be passed through,” Redmer said.

Redmer defended the posting of the bulletin, saying it is a long established way of communicating with insurers. The posting was a response to questions from HMOs about how the approval process would work, he said.

“I never wrote to an HMO. I never called an HMO,” Redmer said. “We never communicated proactively to anybody that this is something that could or should be passed along.”

The 2 percent tax on HMO premiums was the source of a major disagreement between Ehrlich and Democratic lawmakers at the special session held in late December to pass legislation to deal with the state’s medical malpractice insurance crisis.

Ehrlich opposed the tax, arguing that it would be passed on to consumers, but Democrats said HMOs are making huge profits, paying big salaries to officials and should be treated the same as all other insurance companies.

At a news conference Tuesday afternoon, Ehrlich said Democrats have themselves to blame for what he called an unpopular tax increase.

“They bought it. They own it. They have to live with it,” the governor said.

He said Democrats are hearing from constituents who are outraged about the premium increases and “they don’t like it.”

Republican leaders in the Senate and House of Delegates said they will introduce legislation to repeal the tax.

Senate Minority Leader Lowell Stoltzfus, R-Somerset, described the attack on Redmer by Democratic leaders as “a legislative temper tantrum.”

Miller was the harshest critic of Redmer and the only one to call for his resignation.

“I just think there is a pattern of abuse here, a pattern of malfeasance and misfeasance,” he said.

But other top Democratic leaders agreed that Redmer is looking out only for the interests of insurance companies and should become a more impartial arbiter on insurance issues or consider resigning.

Sen. Thomas V. “Mac” Middleton, D-Charles, said insurance commissioners must walk a fine line to balance the needs of consumers and insurers

“It seems very clear to me that the commissioner has fallen off the tightrope into the arms of the insurance companies,” he said.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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