- The Washington Times - Friday, January 28, 2005

ANNAPOLIS — Senate Republicans yesterday said they will submit a bill next week that would repeal a tax on health maintenance organizations that HMOs are passing onto their customers.

The Senate Republicans’ effort matches that of their House counterparts, who said they would submit a similar bill. But neither bill likely will survive in the General Assembly, where Democrats outnumber Republicans by more than 2-to-1 in both chambers.

“We are still working on getting [the bill] drafted,” Senate Minority Leader J. Lowell Stoltzfus said yesterday. “It will be the same bill submitted in the House.”

The bills would repeal a 2 percent tax on HMO premiums that took effect when House Democrats this month overrode Gov. Robert L. Ehrlich Jr.’s veto of a medical malpractice insurance reform bill that included the tax. Mr. Ehrlich, a Republican, had warned that HMOs would pass the tax onto their customers.

Mr. Stoltzfus, who represents parts of the Eastern Shore, said he doesn’t expect the tax-repeal bill to survive but said it at least will give Marylanders a chance to voice their opinion.

“I think the citizens deserve a hearing,” he said. “And whether it gets out of committee and whether it passes will be up to the Democrats that basically imposed it in the first place.”

Senate Minority Whip Andrew P. Harris agreed.

“I think some people don’t understand the reality of economics,” said Mr. Harris, who represents parts of Harford and Baltimore counties. “The average person understands the passing through of taxes. Why the Senate leadership doesn’t understand it is beyond me.”

The Baltimore Sun reported this week that HMOs were passing the tax onto their customers just two weeks after the General Assembly had levied the tax in its override vote. Two of the state’s largest HMOs plan to seek higher premium payments from their clients as early as March.

Health insurers have estimated that the tax will cost them as much as $20 million this year. The increased premiums will cost the average family about $200 more a year.

The revenue from the HMO tax — about $64 million in three years — will be used to subsidize doctors’ malpractice insurance premiums.

On Wednesday, Senate President Thomas V. Mike Miller Jr. and House Speaker Michael E. Busch blamed Insurance Commissioner Alfred W. Redmer Jr. for the higher HMO premiums, saying he encouraged the health insurers to pass on the tax via a memo he posted two days after the override vote.

But a legal opinion from the state Attorney General’s Office found no wrongdoing in Mr. Redmer’s bulletin.

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