More Health Cuts--

This Time Targeted to State Workers and Retirees

October 20, 2004

Maryland has an ongoing revenue shortfall. For the past four years, ongoing state revenues have been insufficient to pay for ongoing state services. This disconnection between ongoing revenues and spending is projected to continue far into the future.

This imbalance can only be addressed by two courses of action: increasing revenues and/or decreasing services.

In recent weeks, the executive branch in Maryland has announced two plans for reducing the cost of services that involve changes in health insurance for state employees and retirees.

On September 8, 2004 the Board of Public Works (comprised of the governor, comptroller, and treasurer) approved changes to limit state health costs by increasing copayments, reducing dental coverage and imposing other shifts in costs from the state to its employees.

A list of these changes can be viewed by clicking on the link in the box above.

Also, on October 15, 2004, the executive branch outlined other plans that are being considered to further shift health costs to employees by increasing premiums and copays.

Specific options under consideration include:

Increasing prescription drug co-pays, shifting as much as $36.9 million in costs from the state to employees;

Charging co-pays for every 30-day supply of drugs (instead of every 100 days under the current plan), shifting $23.7 million in costs from the state to employees; and,

Requiring doctors to submit documentation and get approval before prescribing certain drugs to ensure that the drugs are medically necessary. This is estimated to save the state $9.2 million.

These and other cost-saving measures could save the state $124 million.

To give some context, state health costs for workers and retirees are expected to be $839 million in FY 2005--equal to 3.5 percent of the $23.6 billion budget. The list of potential cuts released on October 15, 2004 would reduce state health costs by about 15 percent.

The $124 million in cuts, if implemented, would dwarf the $47 million cost of living adjustment (COLA) given to employees in FY 2005. State employees received a COLA of $752 in FY 2005, an average increase of 1.6 percent.

State employees received no COLAs in both FY 2003 and FY 2004.

In the coming weeks plans for additional budget cuts in a wide range of state-funded services will become available. We will try to make those cuts accessible on our webpage. MBTPI

Related Reports:

See the list of cuts in employee and retiree health benefits here: