State seeks ways to cut health costs

Options include boosting employee insurance fees, restricting prescriptions

October 19, 2004|By Andrew A. Green | Andrew A. Green,SUN STAFF

Maryland's budget secretary is considering ways to cut more than $70 million from state employee health care costs in the next fiscal year, including requiring some workers to pay more for their insurance and restricting doctors' ability to prescribe them certain medications.

The proposals come two weeks after Budget Secretary James C. "Chip" DiPaula Jr. confirmed state plans to increase employees' co-payments for prescription drugs to contain rising health care expenses. The move angered legislators, who attempted to prevent the administration from passing additional costs to state employees.

But with a letter from the attorney general's office questioning the General Assembly's ability to prohibit the cuts, Gov. Robert L. Ehrlich Jr.'s administration is planning health care changes that could shift nearly $125 million in costs from the general fund to the state's nearly 100,000 employees and retirees.

"Just like any other employer, we are struggling with these increasing costs and how to pay for them," said Cecilia Januszkiewicz, the deputy budget secretary.

The potential cuts, contained in a three-page chart obtained by The Sun, present options the state will consider between now and the end of the year, Januszkiewicz said. She said the administration is consulting with the unions and the General Assembly about them and that there is no target figure for the cuts.

But Sue Esty, the legislative director for the American Federation of State, County and Municipal Employees, Council 92, said union representatives were told Friday that the state is looking for $124 million in cuts.

"These kinds of changes that are being contemplated are nothing short of disastrous for many state employees," she said, noting that the cuts would dwarf the $47 million in cost-of-living adjustments state workers were given last year.

The General Assembly inserted language in the budget this year prohibiting the state from increasing health care costs without an agreement from employee unions. But in March, DiPaula received an unofficial opinion from the attorney general's office saying that provision was invalid because it would amount to a mandate by the legislature that the state increase spending, which it is forbidden to do.

State Sen. Ulysses Currie, the Budget and Taxation Committee chairman, said he is talking with other legislative leaders to find a way to block the cuts. He said they will also ask Attorney General J. Joseph Curran Jr. for a formal opinion.

"I'm very much concerned," he said. "They're looking to stick it to state employees."

The options under consideration include:

Raising employees' share of health and dental insurance premiums by as much as a third, depending on the plan, saving the state between $28 million to $43 million.

Charging a co-payment for each 30-day supply of drugs, instead of the 100-day supply employees now get, a change that would save the state $23.7 million.

Requiring doctors to obtain authorization before prescribing certain drugs to ensure they are medically necessary, providing $9.2 million in savings.

The state did not provide estimated savings for some other suggestions, such as creating a per-admission co-pay for mental health services and adding deductibles for some plans.

The House Appropriations Committee and the Senate Budget and Taxation Committee have scheduled a joint hearing Oct. 26 on the proposed increases.

Esty said AFSCME has scheduled a rally for the same day on Lawyers Mall in Annapolis, just outside of the hearing room.

Currie said new questions have emerged since DiPaula's last appearance before legislators about whether the administration was bargaining in good faith with the General Assembly in the spring. He said he has learned that the administration had already put out requests for proposals for new health plans, which would include higher drug co-pays, when the legislature was drafting the language prohibiting increased costs to employees.

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