State proposes cuts to retiree drug coverage

March 05, 2011|By ANDREW SCHOTZ |
  • June and Clarence Scheer talk about proposed changes for state employee health and prescription benefits.
By Ric Dugan, Staff Photographer

Clarence and June Scheer don't like the state's new plan for their prescription-drug coverage.

Gov. Martin O'Malley is proposing to raise the amounts current and former state workers must pay. The increase would be much sharper for retirees, including the Scheers.

They and other riled-up retirees are contacting state lawmakers.

"Everywhere I go, people are in tears, and that breaks my heart," Del. John P. Donoghue, D-Washington, said Friday.

The Scheers, who live in the Fountain Head neighborhood near Hagerstown, said Del. Andrew A. Serafini and Sen. Christopher B. Shank have been responsive and sympathetic, too.

Currently, active and former state employees pay a maximum of $700 a year for prescription-drug costs through a tiered co-payment  system, according to the state Department of Budget and Management.

The new plan, outlined in the Budget Reconciliation and Financing Act of 2011, is to raise the out-of-pocket limit to $1,000 for individual employees and $1,500 for families.

Retirees would pay up to $4,550.

Clarence Scheer said the proposed burden is unfair.

"You can't literally take the retirees and throw them away and say, 'We're done with you,'" he said.

The new prescription plan would have retirees cover a $310 deductible, then pay 25 percent of the remaining costs until the $4,550 limit. After that, the state would pay 100 percent.

Donoghue and Sen. George C. Edwards, R-Garrett/Allegany/Washington, said legislators are trying to scale back the proposed increases.

"I think it's a pretty big hit on retirees," Edwards said.

The BRFA bill, as it is known, proposes changes to a wide range of areas, such as state employee benefits, economic development and education.

It was heard in the House and Senate budget committees last week.

Part of the BRFA bill addresses the state's systems for pension and retiree health coverage. Combined, they're unfunded by an estimated $35 billion, according to the governor's office.

O'Malley, a Democrat, has proposed making employees pay more into the system.

Unions are objecting to the changes and have planned a major rally in Annapolis on March 14.

The Scheers said retirees don't have the same advocacy network and are learning about changes on their own.

Although some say the proposal for retiree prescription coverage has gotten little publicity, it was listed in a reform package O'Malley announced in January, when he made his fiscal 2012 budget public.

The change was explained in a 12-page packet called "Reforming Maryland's Pension System: A Path to Sustainability."

The packet said Maryland, with a $5 co-pay on generic drugs and $25 co-pay for preferred drugs, has a more generous plan than many states.

It also said the state's retiree health liability is only 1 percent funded.

O'Malley's office estimates the state's unfunded liabilities as $19 billion for the pension system and $16 billion for retiree health coverage.

"We're putting the pension system on a path to accountability," O'Malley spokesman Shaun Adamec said Friday.

Under the governor's plan, by 2020, retirees who qualify would move from state coverage to Part D of the federal Medicare plan — which a state benefit commission recommended in its final report in December.

Adamec said the move ties in with the expansion of federal health care.

"It doesn't make sense not to take advantage of it," he said.

Softening the blow

Co-pays also would increase under O'Malley's plan.

Edwards sits on the Senate Budget and Taxation Committee, where the BRFA bill was heard last week.

He said the bill, as a proposal, is subject to alterations within the budget committees and the General Assembly as a whole.

Members of his committee have concerns about the prescription increase for retirees, so "I think you'll see some change" to the proposal, Edwards said.

Donoghue said he and others on the Health and Government Operations Committee plan to work with House Speaker Michael E. Busch, D-Anne Arundel, on softening the prescription drug proposal.

"We're going to try to protect it as it is," Donoghue said, referring to the state's current coverage.

Busch spokeswoman Alexandra Hughes acknowledged that the speaker is concerned, too, and might help craft a better proposal, possibly before the bill gets out of the House Appropriations Committee.

"They're looking at some options to try to relieve the burden," she said.

Relying on the state

June Scheer worked for the state Department of Social Services for more than 17 years. She was an administrative assistant for the director in Hagerstown when she retired in 1999.

Her husband, Clarence, was a Sears executive. He joined his wife's health-care plan when he retired in 1993.

He said his wife willingly worked in the public sector, getting paid less than she would in the private sector, so the couple could take advantage of the better benefits when they retired.

June Scheer said retirees don't get raises, as current workers do, or Social Security cost-of-living increases.

"These people's income is stagnant, but they're being expected to pay more," she said.

They both rely on the state prescription-drug coverage.

June Scheer said her medication regulates such things as blood pressure and cholesterol.

Her husband's needs are greater.

"Without the prescriptions I take, the illnesses would be debilitating," Clarence Scheer said.

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