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News of the Day ... in Perspective


Maryland governor to veto state fund to subsidize physicians’ liability premiums.

When the Medical Mutual Liability Insurance Society, Maryland’s largest malpractice insurer, announced a 28 to 33% premium increase, Governor Robert Ehrlich called a special session of the legislature.

The state is facing a crisis in availability of medical services. Some Maryland physicians have resorted to membership-style patient fees. Many have stopped performing high-risk procedures. Some, such as 41-year-old obstetrician-gynecologist Nancy Brown-Holt, have decided to retire from medicine completely (Baltimore Sun Jan. 5, 2005).

In H.B. 2, the legislature approved a 2% surcharge on HMOs to pay for a state fund to hold premium increases to 5%. Calling the surcharge a tax, the Governor promised to veto the bill. Key legislators have vowed to override the veto.

The Maryland state medical society (MedChi) and a group representing 50 hospitals support the legislation, saying that it “makes progress” and would “stop the bleeding.”

The Governor said that the legal changes will have a negligible effect on future insurance rates. If his veto stands, the Governor has promised physicians short-term relief in the form of a tax credit (Washington Post, Jan. 5, 2005).

At a forum sponsored by the Maryland Public Policy Institute, Michael Krauss, Professor of Law at George Mason University, said the bill would have a negative effect on tort reform. The stop-gap fund, also called a reinsurance fund, “subsidizes tort liability.”

Whether the cause of the liability crisis is physicians, lawyers, or insurance companies, the bill would exacerbate it by shifting the costs from the responsible parties either to purchasers of HMO coverage or to all state taxpayers, Krauss wrote (Baltimore Sun, Dec. 27, 2004).

Additional information:

Maryland Public Policy Instiute: www.mdpolicy.org

Action Alert - Help stop the Superfund for Trial Lawyers! - 1/7/2005

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