The Ehrlich administration is circumventing a law that freezes health costsand benefits for state employees, meaning 100,000 workers and retirees couldsoon pay more for doctors' visits, treatments and drugs.
Seeking to shield state employees from soaring health care costs, fiscalleaders in the Democrat-controlled General Assembly this year inserted arestriction in the state's $23.6 billion spending plan over the objections ofaides to Gov. Robert L. Ehrlich Jr.
Health, dental, mental health and prescription drug plans must provideworkers with the same level of benefits at the same cost in 2005 as in 2004,the budget bill says, unless union representatives and state officials agreeon changes.
But in an effort to control state spending, Ehrlich and the Board of PublicWorks approved new health care contracts this month that increase co-paymentsin many plans from $5 to $15 for primary care visits and impose $50 emergencyroom fees for the first time for many workers.
The new contracts appear to reduce benefits in areas such as dentalcoverage, and workers are awaiting notification of expected premium increases.Higher prices and reduced coverage are scheduled to start Jan. 1., after anopen enrollment period.
Union and legislative leaders say they were stunned by what they arecalling a unilateral decision, and are scrambling to convince theadministration to comply with the budget bill. Administration officialsresponded that they consider the law invalid.
The skirmish is the latest between the Republican governor and the stateemployee labor unions, which have traditionally supported Democrats. Ehrlichrecently won a court case invalidating labor contracts negotiated in theclosing hours of his predecessor's administration.
Sen. Ulysses Currie, chairman of the Senate Budget and Taxation Committee,has summoned Budget Secretary James C. "Chip" DiPaula Jr. to a hearing Tuesdayto explain the situation.
"The committee is quite concerned," Currie said, "and we want someanswers."
During a hearing on the health issue this year, DiPaula told lawmakers hewas working on a plan to contain costs and would return with solutions, Curriesaid.
"That did not happen," the Prince George's County Democrat said. "Thesecretary said to us, `We are trying to work this thing out.' ... He didviolate the spirit of the hearing, and he violated the language of the jointchairman's [budget bill] report."
Provisions inserted by lawmakers into the spending plan, called "budgetlanguage" in Annapolis parlance, have the force of law, Currie and otherssaid.
But the administration says it is not bound by the restriction because itwould increase state spending, and because it is worded in a way that exceedsthe Assembly's authority.
Under Maryland's unique budget laws, the General Assembly can only cut fromthe budget submitted by the governor and cannot add spending unless itidentifies a revenue source to pay for it.
Freezing workers' co-payments would increase state spending on employeehealth care, said Cecilia Januszkiewicz, deputy secretary of the Department ofBudget and Management.
Additionally, Januszkiewicz said, the budget language restricts premiumincreases and other costs through all of 2005, though the bill is valid foronly the 2005 fiscal year, which ends June 30.
"The General Assembly doesn't have unlimited powers to do whatever it wantsin the budget," she said.
DiPaula, the budget secretary, said charging higher co-payments would savetaxpayers "millions," but he could not immediately provide a specific figure.
The fiscal 2005 budget increased health care spending by $22.8 million overthe previous year, but that is $47 million less than what legislative analystssay is necessary for "status quo" coverage. If the state doesn't reducecoverage or charge workers more, it will have to make up the difference bydipping into savings. State and local governments everywhere are grapplingwith similar health care issues, as are companies.
Co-payments for primary care visits are rising to $15 in sixpoint-of-service and health maintenance organization options for workers,Januszkiewicz said. While biweekly insurance costs have not been finalized, "Iwould say it is likely that premiums will go up because we live in a worldwhere health care costs go up every year," she said.
Higher employee health costs would negate the $752 pay increase stateworkers received this year, their first raise in three years, said HouseSpeaker Michael E. Busch. He criticized the governor for using thethree-member Board of Public Works to overturn the will of the legislature.The board is composed of Ehrlich, Comptroller William Donald Schaefer andTreasurer Nancy K. Kopp.
"The biggest issue is the erosion of representative democracy," said Busch,an Annapolis Democrat. "You have 188 people that reach an agreement with theexecutive on the budget, and you have a group of three people changing thelaw."
Kopp, who represents the legislature on the board, said she voted for thecontracts after being told that discussions between the unions and theadministration had taken place. But she said she thought the changes wererelatively minor, compared with other alterations that DiPaula testified werelooming.
"I think its worthwhile to have a hearing to go through these things, toair the potential changes that may be made," she said.
The largest state employee union, AFSCME Council 92, has asked Ehrlich tosuspend any reduction in benefits.
"Our goal is to stop this," union President Sally Davies said in aninterview yesterday. "He just seems so intent not to bargain with us orconsider this, even though it is the law."
While the courts could be asked to settle the dispute, the union said ithopes to avoid a legal tussle.