The Maryland Health Care Commission warned yesterday that an HMO tax included in the recently passed malpractice reform bill was likely to increase the number of people without insurance and could force it to cut benefits for the small-employer policies that cover nearly half a million Marylanders.

The commission, which is controlled by appointees of Gov. Robert L. Ehrlich Jr., voted to send a letter to legislative leaders and to the governor outlining its concerns. The General Assembly approved last week legislation extending a 2 percent premium tax to HMOs to subsidize malpractice insurance premiums and increase Medicaid payments.

Ehrlich has promised to veto the bill - he is expected to do so Monday - and the legislature would then vote on whether to override the veto.

Commission member Robert Moffit called the bill "a classic, textbook example" of trying to solve one problem - the cost of malpractice insurance - by exacerbating another - the cost of health insurance.

"Higher premiums make health care increasingly unaffordable," he said, "and the rolls of the uninsured will grow."

Senate President Thomas V. Mike Miller, a Democrat who helped push the bill through a special legislative session, said the commission's action, along with comments this week by Insurance Commissioner Alfred W. Redmer Jr. that the bill was "unclear" and "unworkable," represented an orchestrated effort by the governor and his appointees to discredit the bill.

Shareese DeLeaver, an Ehrlich spokeswoman, denied that the governor's office was coordinating any such effort. "Is it so far-fetched to think other state officials see this the way the governor does?" she asked.

Stephen J. Salamon, chairman of the health care commission, defended its independence. "I have the highest respect for Senator Miller, but the fact is that the Maryland Health Care Commission has consistently responded to legislation that affects the commission, and will continue to do so," he said.

In other fallout from the malpractice legislation yesterday:

  • A group of brokers handling malpractice insurance, called Medical Malpractice Insurance Professionals, said the legislation - which would cut their commissions and mandate direct sales at a discount by Medical Mutual Liability Insurance Society of Maryland, the state's largest malpractice insurer - violated their contracts with Med Mutual. However, Brian K. Eisenberg, president of his own brokerage and a spokesman for the group, said it was hopeful that lawmakers would make changes, after the bill became law, to address their concerns.

  • Foris Surgical Group, a five-surgeon practice in Frederick that had shut down Jan. 1 to bring attention to the malpractice issue, said it would return to the operating room next week. In a statement, it called the bill "a short-term Band-Aid for the liability disease" which "will only serve to temporarily mask the symptoms." However, Dr. Mark Artusio said the group had "helped raise awareness" and would continue to be active on the issue, but "we feel a lot more comfortable in scrubs and masks."

  • The bill was endorsed by the Greater Washington Board of Trade, which represents 1,200 businesses in Washington and its suburbs. "I don't think it's a perfect bill, but very few legislative compromises are perfect," said Len N. Foxwell, director of government relations. "It is a good start."

    Another business group, the Maryland Chamber of Commerce, decided to take no position on the bill, said William Burns communications director.

  • GE Medical Protective, one of three companies other than Med Mutual that cover Maryland doctors for malpractice, is concerned that the bill "will result in additional uncertainty in the Maryland market" and would continue to evaluate "how the risks posed by the Maryland market will compare with those in other states if these provisions become law," according to spokesman John Novaria.

    Miller said the legislature had heard the concerns of the brokers, the insurers and others, and "we'll look at all those issues," considering amendments as needed. Overall, he said, the legislation was "a very fine bill" and he was confident lawmakers would override the expected veto. "The only persons who have opposed it have been hand-picked by Ehrlich," he said.

    On the health care commission, seven Ehrlich appointees voted to send the letter. The only dissenting vote came from Democratic holdover Constance Row, who said she agreed with the substance but suggested phrasing the letter as "information" rather than "concern."

    The commission oversees the insurance purchased by small employers in the state. As of the end of 2003, the most recent figures available, the policies covered 451,791 Marylanders - 261,481 of them in HMOs. By law, the average premium for the insurance can't exceed an affordability cap of 10 percent of the state's average wage.

    According to calculations by the commission's staff, if the HMOs add the tax to the premium - as they have said they will do - projected premiums this year would reach 99.8 percent of the cap.

    "If health care costs go up, we're going to bust the cap, right?" Moffit asked.

    Whether, or when, that happens would depend on whether health costs continue to increase at projected rates, and how fast wages rise. If the cap is exceeded, the commission would have to reduce benefits or increase co-payments and deductibles to bring the cost in line with affordability rules.