BALTIMORE - About 450,000 Marylanders could lose prescription drug
coverage due to a decision by state regulators to eliminate the
requirement for drug coverage in health insurance policies offered by
The new plan, called PharmFlex, eliminates required coverage for brand name
medications and increases the deductible employees must pay for generic drugs
from $250 to $2,500 for an individual. Employees must also pay 75 percent of the
generic drug price.
"We're trying to offer a core benefit that allows flexibility and some
stability for the next five years so we don't have to keep revisiting it," said
Rex W. Cowdry, executive director of the Maryland Health Care Commission.
The commission voted Tuesday to implement the new plan, which is expected to
reduce insurance costs by more than 10 percent.
Under the plan, employers of up to 50 workers must continue to provide
generic drug coverage if they offer health insurance at all, and regulators
expect many of them will cover more than the minimum requirements. Currently, 90
percent of small employers who offer health insurance pay to provide additional
coverage to reduce out-of-pocket expenses for their employees, said Stephen J.
Salamon, who chairs the commission.
Salamon said the goal of the new plan is to give employers options while
reducing insurance costs and possibly enticing more businesses to offer coverage
for their workers. Currently less than half of the 110,000 small businesses in
the state offer insurance, a 15 percent drop since 1999. Health insurance is
optional for small businesses, and more than 59,000 employers do not offer
health coverage at all.
"PharmFlex is a whole heck of a lot better than having no options at all,"
The commission has been under legal pressure to make insurance policies more
affordable. Under state law, the average cost of health coverage must be less
than 10 percent of the state's average wage, or about $4,200. The current price
of coverage is more than that, forcing the commission to adjust the standard
Constance Row, the only commissioner to vote against the new plan, said
"leaving employers with the option only to give employees high-cost pharmacy
coverage could have adverse affects."
If employers do not opt to go beyond the minimum requirements, some workers
could be left with substantial out-of-pocket expenses for prescription drugs,
Other commissioners, including Andrew N. Pollack, expressed concern that the
plan would not reduce costs enough to attract more insurance providers to the
market, where only two carriers now provide 94 percent of the coverage to small
"Maybe it isn't significant enough," he said.
Small business owners and representatives have mixed reactions to the plan.
Jeff Levin, general manager of the retail store Fields of Pikesville, said he
agrees with deductible hikes, but that name brand drugs should still be included
in the plans.
"In my experience, if it's not required, it isn't offered" to employees, he
said. "Some drugs are only available in brand names, and that's a problem."
Jeffrie Zellmer, legislative director for the Maryland Retailers Association,
said he supported the cuts to prescription drug coverage, and suggested that
even more mandated services should be eliminated, such as some mental health
services, in order to further reduce costs.
Ronald W. Wineholt, vice president of governmental affairs for the Maryland
Chamber of Commerce, said the plan "is a step in the right direction."
"It's not likely that employers will stop providing drug coverage," he said.
In terms of lowering costs, however, "it won't make a dramatic difference.
... At best it might help balance out the ongoing rise in health costs."
plan will go into effect July 1.