State set to raise co-pay for drugs

Tight budget forces move, DiPaula tells lawmakers

Assembly had frozen health costs

October 06, 2004|By David Nitkin | David Nitkin,SUN STAFF

Calling Maryland's drug benefit overly generous compared with nearby states and private businesses, the state's budget secretary said yesterday that nearly 100,000 state workers and retirees will soon pay significantly more for prescriptions despite a General Assembly directive freezing health costs.

Budget Secretary James C. "Chip" DiPaula Jr. told the Budget and Taxation Committee that charges for drugs will almost certainly increase in January because Gov. Robert L. Ehrlich Jr. needs to control spending.

"In order to manage the budget, the governor must retain the rate of growth" in employee health costs, DiPaula said. "Prescription drug co-pays is one of the best ways to manage costs."

The committee had summoned DiPaula to explain why doctor visit co-payments were rising despite a law passed by the Assembly in April that locks in current insurance rates and benefits unless employee unions agree to changes.

As they grilled the secretary about why their legislative mandate was being ignored, lawmakers learned that the office visit fee increase is just part of the governor's plan to contain health costs by asking workers and retirees to contribute more for their care.

The current state program, in which 97,000 workers and retirees pay $3 for up to a 100-day supply of a generic drug, $5 for a preapproved name-brand prescription and $10 for other name-brands, is too expensive to maintain, DiPaula said.

"That is just about the lowest you can find anywhere," the secretary said, noting that Pennsylvania charges workers between $10 and $36 for a 30-day drug supply. Virginia charges between $15 and $35 for a month of medications.

Lawmakers and state workers reacted angrily to the proposed changes -- expected to take effect Jan. 1 -- saying that low-paid employees and retirees on fixed incomes would suffer. The higher prescription fees have not been determined.

"Those with low incomes can least afford some of these increases," said Sen. Nathaniel J. McFadden, a Baltimore Democrat.

Department of Health and Mental Hygiene employee Ronald Rheubottom, 59, said after the hearing that he had been planning to retire in November after more than four decades with the state. But now he will delay those plans, he said.

"I take 17 medicines. I cannot retire, taking 17 medications," Rheubottom said. "And I have given them 42 faithful years. I've given them my best years."

Worker health care benefits cost $839 million in the $23.6 billion budget, officials said, and are growing faster than education and Medicaid spending.

Lawmakers and the Ehrlich administration grappled with the issue of rising health-care costs as they were preparing the current fiscal year's budget last spring.

Reaching no agreement of how to buffer workers from cost increases, lawmakers passed a budget bill that froze insurance costs at 2004 levels throughout the 2005 calendar year.

Premiums and other costs could rise only if the administration reached agreement with unions, the law says.

But last month, the state Board of Public Works, made up of Ehrlich, Treasurer Nancy K. Kopp and Comptroller William Donald Schaefer, approved new health care contracts with higher costs.

Lawmakers said the administration misled them and deliberately ignored the law. Unions were not consulted.

"You're not moving in good faith," said Sen. Gloria G. Lawlah, a Prince George's County Democrat. "You cannot run government without the employees."

DiPaula and his top deputies said yesterday that they were relying on a March 11 letter from the attorney general's office that the budget language was not valid because it appeared to require higher state spending -- an authority the Assembly does not have.

The freeze also extends to the end of next year, according to the law, even though the budget bill containing the provision is valid only through June 30.

But lawmakers said DiPaula never showed them the attorney general's letter as the freeze was being discussed. Sen. Patrick J. Hogan, a Montgomery County Democrat and vice chairman of the committee, called the omission "offensive."

Despite compelling DiPaula to testify, lawmakers showed little appetite yesterday for trying to enforce the budget law.

There was no talk of a court challenge or other measures to change the governor's policies, especially in light of the March attorney general's letter.

Lawmakers could ask for a formal opinion from the attorney general's office, which has more authority than the advice letter, said legislative fiscal analyst Warren G. Deschenaux. But until then, the March letter is the most valid advice, he said.

During yesterday's hearing, Kopp, the treasurer, expressed regret that she did not ask tougher questions about health-care costs during the public works meeting.

An appointee of the Assembly, Kopp said she was not aware of the budget language at the time.

Union leaders said yesterday that they hope to keep negotiating with the Ehrlich administration, even though they said the governor shows little desire to abide by the legislature's wishes or collective bargaining laws.

"That budget language only reinforces the existing law," said Sue Esty, a lobbyist with the American Federation of State, County and Municipal Employees.

"It's kind of like having a speed limit, with no traffic cops. And this governor is speeding," Esty said.

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