By law, any proposed insurance rate increase in Maryland has to be approved by the state Insurance Commissioner, currently Ehrlich appointee Alfred W. Redmer, Jr, a former insurance broker and insurance company owner. The Insurance Commission is a taxpayer-funded state entity with an obligation to regulate insurance companies in the public interest. Medical Mutual requested a rate increase of 41 percent last June, rebuffed on Sept. 14 by Redmer, who allowed the 'modified' rake hike of one third.
Redmer confirmed this information in a Dec. 28 phone interview. Asked why he allowed the 33 percent rate increase, Redmer cited "the standards we must use and the process we must use in applying those standards." Under Maryland law, he explains, "any rate increase has to be adequate but not excessive." The rate cannot be discriminatory; it has to be high enough to prevent financial distress. All requests for rate hikes, he added, go to our "Property and Casualty unit, under [Pamela R.] Johnson." In addition to the internal review, Redmer said, Maryland also contracted an independent study and held a public hearing, where anyone who wanted could have an opportunity to testify regarding the request.
He could not recall the date of the public hearing. According to a press release, a hearing was held on Aug. 18, at which testimony was presented by Med Mutual, by the actuary commissioned by the Insurance Administration, by MedChi (the insurer's lobbying group) and by individual physicians.
My own sense about this public hearing is that impeachment proceedings should commence against Gov. Ehrlich without delay.
There is no actuarial evidence to support any big rate hike for Med Mutual. The company's own web site touts its viability, solid investment strategy, and size, "one of the leading professional liability insurance companies in the United States" which "serves more Maryland physicians than all other companies combined." The company (which donates mostly to Republican candidates including Ehrlich, although to select others like John Giannetti of Prince George's County), also has its own PAC. Maryland's state Board of Elections records show that formerly convicted lobbyist Bruce C. Bereano serves as treasurer for the Medical Mutual PAC.
State Sen. Sharon M. Grosfeld (D-Distr.18, Montgomery), who served on a Senate Special Commission on Medical Malpractice Liabiliity Insurance through summer and fall 2004, sees no need for the increase allowed by the Insurance Commissioner. By telephone, Grosfeld stated categorically that the increase is not justified. Referring to the Maryland Senate commission's work, Gosfeld said "data from all sides" should have shown anyone who read the data that Med Mutual has a sufficient level of funds to pay its costs and claims.
Grosfeld reiterated that the commission found that Med Mutual had no need to ask "state taxpayers to pay," which is Gov. Ehrlich's aim. "The Governor," she added, "is going after state taxes and all of us who pay taxes. He's going after the [state] general fund, which means that very needed programs will be cut"--including, ironically, some programs that help physicians' patients.
Redmer, incidentally, was also Baltimore County Co-Chair of the Maryland for George W. Bush campaign team.
What we have going on in Maryland right now is a miniaturized version of classic Bush administration strategy: hype up a nonexistent crisis, pressure public officials and the news media to go along, and push through a policy initiative that further undermines the middle class by conveying public resources into private hands. Just as Team Bush drummed up a nonexistent "mushroom cloud" to justify invading (and privatizing) Iraq, it is now drumming up a nonexistent crisis in Social Security to justify invading and privatizing one of the New Deal's most successful programs.
Here in Maryland, Bush-lite "Team Ehrlich" is doing a version of the same, mounting a campaign of hype to convey public money into the hands of insurance companies.
It would be interesting to find out whether Ehrlich's people put the company up to the rate hike, and whether the Bush team put Ehrlich's people up to it. After all, any successfully promoted "malpractice crisis" would aid Bush's so-called tort reform.
This story was published on December 28, 2004.