Maryland Health Insurers Raise Rates to Cover Newly Enacted 2% Tax

Health insurers in Maryland plan to increase their rates to cover a 2% tax on Health Maintenance Organization (HMO) premiums, a contentious issue that was passed by the state legislature last December. The tax aims to raise an estimated $65 million in the first year, creating a fund to hold down the cost of malpractice insurance for doctors and increase payments to doctors who treat Medicaid patients. Approximately 1.2 million Marylanders are enrolled in HMOs, and a 2% rise in premiums could mean increases ranging from $10 to $15 a month, paid by employers, subscribers, or split between companies and their workers.

Key Takeaways:

The 2% tax on HMO premiums in Maryland is expected to raise rates for approximately 1.2 million Marylanders enrolled in HMOs.
The tax will raise an estimated $65 million in the first year, creating a fund to hold down the cost of malpractice insurance for doctors and increase payments to doctors who treat Medicaid patients.
Two HMOs, Mid Atlantic Medical Services Inc. and Aetna Inc., have informed the state insurance commissioner that they are raising rates March 1, and 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.
About 60% of the 450,000 Marylanders covered by policies for small employers, those with 50 or fewer workers, are in HMOs, according to Enrique Martinez-Vidal, deputy director of the healthcare commission.
The tax pass-through will be greatest on small businesses or those who buy coverage individually, officials said.

Statistics:

Approximately 1.2 million Marylanders are enrolled in HMOs.
The 2% rise in premiums could mean increases ranging from $10 to $15 a month.
The tax will raise an estimated $65 million in the first year.
About 450,000 Marylanders are covered by policies for small employers, those with 50 or fewer workers.
About 60% of those covered by policies for small employers are in HMOs.

Sources:

Governor Robert Ehrlich
Alfred W. Redmer Jr., state insurance commissioner
Enrique Martinez-Vidal, deputy director of the healthcare commission
House Speaker Michael Busch