ANNAPOLIS – Maryland officials are considering health insurance changes that could cost state employees an additional $720 to $1,175 annually. “There is a consensus that we need to change health benefits,” said Maryland Treasurer Nancy Kopp, who serves on the state’s commission studying pension reform. “Ours are more generous than other states.”
| The proposals | ||||
| Action | Savings | Annual impact on average enrollee | ||
| Plan A | ||||
| State subsidy reduced to 75 percent for all plans | 4.5% | $522 | ||
| Institute an in-network deductible of $250/$500 | 2.4% | $273 | ||
| Out-of-network deductible to $500/$1,000 | 0.5% | $59 | ||
| Plan B | ||||
| Coinsurance to 90 percent in-network and 70 percent out-of-network with an out-of-pocket maximum to $2,000/$4,000 | 3.9% | $447 | ||
| Spouses eligible under own employer must enroll in employer plan | 5.9% | Varies | ||
| Office visit copays to $20/$30 | 0.4% | $51 | ||
| Plan C | ||||
| State subsidy reduced to 75 percent for preferred provider organization | 1.9% | $522 | ||
| State subsidy for all retiree plans reduced to 75 percent for retiree and 50 percent for dependents | 1.8% | $273 | ||
| Coinsurance increased to 90 percent in-network and 70 percent out-of-network with an out-of-pocket maximum to $2,000/$4,000 | 3.9% | $447 | ||
Maryland offers its employees a generous package of health benefits that will cost the state roughly $1 billion in fiscal 2011. And the expenses are expected to continue growing by roughly $100 million annually — at a rate much higher than the state’s estimated revenue can afford.
Maryland’s legislative analysts are recommending that the state cut health insurance costs by 10 percent by scaling back hefty benefits promises to the level provided by most other states.
The analysts — from Maryland’s nonpartisan Department of Legislative Services — presented three cost-cutting proposals on Monday to the pension commission, which plans to vote on the proposals next week.
One plan would reduce the state subsidy from 85 percent to 75 percent — which would cost employees roughly $522 more annually and charge more for prescriptions, among other changes.
Another plan would exclude spouses from receiving state-sponsored health insurance if they are eligible for insurance under another employer, and increase coinsurance and office visit copays.
The third plan would reduce the state subsidy to 50 percent for all dependents and to 75 percent for preferred provider organizations, among other changes.
All three plans would cut state costs by 10 percent and add an average $720 to $1,175 to employees’ payments annually.
The commission also is reviewing current retiree health benefits, which are projected to double in eight years to $800 million. Legislative analysts are recommending the state cut that expense in half over the next five years, or risk losing its valuable AAA bond rating.
The commission is considering a proposal that would require employees to earn 15 years of credit — a 10-year increase — before qualifying for health benefits as a retiree. Another proposal would provide retiree health benefits only to those employees who retire directly from the state.
