Insurers targeted for tax increase. (Maryland's health insurance industry; includes related article)

Proposals would raise $132 million next year

Struggling to close Maryland's severe budget deficit, the General Assembly is looking to Maryland's insurance industry as a way to collect an additional $132 million next year.

Raising the insurance premium tax rate from 2 percent to 3 percent, repealing the tax exemption Blue Cross and Blue Shield of Maryland enjoys, levying taxes on health maintenance organizations and annuities purchased in state, and raising insurers' fees to supplement the state Insurance Division's budget are suggestions of the Joint Study Group on Revenues, a 20-member legislative panel which examined the state's tax structure during the legislative interim.

But most of the findings, none of which has been adopted by the group's members, are under attack by not only the insurance industry, but from Insurance Commissioner John A. Donaho and consumer groups charging that higher taxes on insurers means higher insurance premiums for consumers.

"We've got to make up our minds whether we want a domestic industry," said Donaho, suggesting higher …