Md. may let firms drop drug coverage

Option is being weighed for small businesses

Standard health benefits in peril

September 16, 2005|By M. William Salganik | M. William Salganik,SUN STAFF

Small employers in Maryland might not be required to offer prescription coverage as part of their health insurance next year, under cost-cutting options presented yesterday to the Maryland Health Care Commission.

The commission, which sets a standard benefits package for employers with up to 50 workers, is required to keep the average cost for coverage below the affordability limit of 10 percent of the state's average wage.

With a mix of individual and family coverage, the policies averaged $4,335 per worker last year, $77 over the limit, and are projected to go over the limit again in 2006.

If the commission removes a benefit from the standard package, such as prescription coverage, employers could still buy the coverage as an add-on.

But only the cost of the standard package is computed in determining if the small-employer policies meet the legal test of affordability.

About 450,000 Marylanders are covered by the small-employer policies. The commission will conduct a series of meetings around the state next month before voting on benefits changes in November. Any changes would take effect in July.

In addition to limiting or eliminating prescription coverage, options presented yesterday included removing requirements to cover a range of other benefits, from transplants to medical equipment.

The affordability limit in the law means that legislators "give us the job of taking benefits away from sick people," complained one commission member, Ernest Crofoot. "That's not what I came on this commission to do." He said the commission should let lawmakers trim benefits, "then call the newspaper and say, `Here's what the legislature did to your benefits.' "

"There are not a lot of easy choices here," answered the commission's chairman, Stephen J. Salamon. "What we are tasked to do is to come into compliance with Maryland law. That is our duty. That is what we took our oath to do."

Besides an action this fall to keep policies under the affordability cap next year, the commission also is looking at longer-term changes that would require legislative action.

The decade-old state small-employer program was designed to make sure health coverage available and affordable for small businesses with high-risk employees, explained Dr. Rex W. Cowdry, the commission's executive director.

Therefore, it required coverage of pre-existing conditions and used "community rating," in which people in bad health pay the same rates as those who are healthy. The rates can vary with age.

The problem, he continued, is that while this makes coverage more affordable for the sick, it increases costs for the healthy - which can prompt the healthy - or their employers - to opt out of the system. That in, turn, can trigger a "death spiral" in which rates get higher for those who retain the small-employer coverage, he said.

Employers with young healthy workers, he said, can be self-insured or not offer insurance, then join the small-employer system with no penalty if their workers get sick. More than 58 percent of small employers in Maryland don't participate in the program, he said.

He outlined, without making any recommendations, a number of possible long-term fixes for the system, including allowing insurers to consider health status in setting premiums, creating a separate program for sicker people, creating a reinsurance pool to cover high-cost cases, and establishing a state-wide purchasing pool.

Possible cuts

Here are cuts the commission is considering:


Benefits modified: Deductibles for prescriptions would be increased from $250 to $500 per person and coverage, now unlimited, would be capped at $2,000 a year. Co-payments would be increased for brand-name drugs.

Benefits eliminated: None.

Estimated premium savings: 4.7 percent. OPTION 2

Benefits modified: None.

Benefits eliminated: Prescription coverage.

Estimated premium savings: 8.8 percent. OPTION 3

Benefits modified: Coverage would be reduced, but not eliminated, for mental health and for outpatient rehabilitation.

Benefits eliminated: Prescriptions, transplants, medical equipment, chiropractic, post-hospital nursing home care, ambulance service, blood and blood products.

Estimated premium savings: 17.3 percent

Town meeting schedule

Oct. 5, Cambridge: 9 am. to noon, Hyatt Regency Resort, 100 Heron Blvd.

Oct. 12, Hagerstown: 11 a.m. to 2 p.m., Clarion Hotel, 901 Dual Highway

Oct. 20, Rockville: 11 a.m. to 2 p.m., Doubletree Hotel, 1750 Rockville Pike

Oct. 26, Baltimore: 10 a.m. to 1 p.m., commission offices, 4160 Patterson Ave.

To be scheduled: Annapolis, Southern Maryland

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