Md. insurance agency sued on rate secrecy

August 10, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

A former state regulator has sued the Maryland Insurance Administration after the agency refused to release publicly the rates it approved last month for a new standard package of health benefits to small businesses.

Darah Phillip Kehnemuyi, a lawyer with offices in Damascus and Frederick, said in a lawsuit filed this week that the administration's failure to release the rates violated the spirit of a new health insurance law intended to encourage comparison shopping and price competition.

The lawsuit, filed in Montgomery County Circuit Court Monday, accuses regulators of violating the state's freedom of information law.

"What I really want to know is who has the cheapest product around," said Mr. Kehnemuyi, who was chief attorney for the state insurance agency in 1989-1990.

"I think the point of this law when it was passed was to make insurance affordable, and if we make it generally available to the public what these rates are, they'll be able to comparison shop," he said. "This is going to promote competition in the marketplace that theoretically will push prices down."

Mr. Kehnemuyi said he filed the lawsuit after insurance regulators told him on July 21 that the information he sought was proprietary commercial information.

"So why is it confidential?" Mr. Kehnemuyi said. "The theory is, there should be one basic rate."

He argued that the insurance administration regularly publishes a comparison of rates for automobile insurance, which is a fairly standard product.

State regulators yesterday declined comment until they could review the lawsuit.

Dennis Carroll, principal counsel to the insurance administration, also cited the proprietary nature of the information when The Sun was denied a similar list of rates in June.

He said releasing the insurers' base rates could be misleading because price adjustments made for age or geography could turn a comparatively low basic rate into the most expensive product for an individual business.

In the past, shopping for health insurance has been complicated because insurers offered different basic benefits with a variety of options.

But under a law that went into effect July 1, the legislature attempted to make comparisons of different premiums easier. The law requires insurers selling to businesses with between two and 50 employees to offer a standard package of benefits at the same price to any small group that asks for it.

In a modification of the community-rated, or one-price-for-all, insurance, the Maryland law also lets insurers adjust their rates based on a person's age and where the person lives or works.

Small businesses may obtain rates for the standard benefits package through a broker or, in some cases, directly from the insurance company.

Regulators said last week that they were preparing to publish a chart of sample health insurance rates offered by insurers for different sized businesses in different parts of the state to encourage comparison shopping.

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