When New Jersey officials seized financially troubled Mutual Benefit Life Insurance Co. last month, the action marked the fifth time this year regulators had to come to the aid of a major insurance firm.
Given the close ties many health maintenance organizations have with the insurance industry, which is having problems related to real estate, health-care and insurance experts were asked Maryland HMOs with ties to insurers could experience a backlash that would leave patients without coverage.
The answer appears to be "no," because Maryland has strong regulatory safeguards to prevent the collapse of an HMO.
State officials can take over a troubled HMO until a merger partner can be found, as they did in the case of CareFirst this year, Maryland Insurance Commissioner John A. Donaho said yesterday. If no partner is located, the state can force a merger or a sale, or force other HMOs to admit patients of a failed HMO, Mr. Donaho said. He said HMOs have more stringent capital reserve requirements than insurance firms.