Last Chance Missed to Rectify State Retiree Drug Benefit Theft?

by Peta Richkus.

Editor’s note: This piece is a follow-up to our earlier post “Don’t Use Inaccuracies to Sell A Bad State Retiree Drug Plan,” which was an open letter from Peta Richkus outlining how data was being used inaccurately to justify changes to prescription drug coverage from the State’s Medicare-eligible retired employees. The State Senate and House subsequently passed a bill (“SB946”) that did not have the amendments for which Richkus advocated. A joint Conference Committee was appointed to resolve differences between the House and Senate versions of the bill. What follows is an open letter to the General Assembly based on a letter Peta Richkus sent to the members of the Conference Committee.

Dear Conference Committee Members for SB946-Revised:

Thank you to those Members who have tried to absorb what their Medicare-eligible retiree constituents have been telling them about the impacts from the loss of their long-expected, and long-promised, prescription drug benefit. The Conference Committee’s final effort to reconcile the House and Senate versions of SB946 is the last opportunity to make the best of what will still be a nightmare for the State’s oldest retirees.

With respect, I urge the Members to rework the currently recommended monitoring/reporting process and, rather, establish a task force or study group, with adequate funding, to consider all of the issues relating to this bill using the House and Senate Amendments as the task force outline and working with DBM and DLS staff as they proceed with implementation plans. The rush to assemble a patchwork of fixes without an appropriate review is not in the best interests of the State nor its retirees.

Retiree representatives and the representative unions should be included so that the task force has the benefit of the lived experience of aging retirees dealing with the actual health care and prescription drug realities of those over 65; realities that are not to be found in numerical averages and the analytics of actuarial slide rules.

A task force report can be required by the time the General Assembly meets next January 2020.

I urge you NOT to rush through this complex matter to meet a timeline now in suspension as a result of the federal injunction arising from the Fitch et al v. State of Maryland et al case now before the US District Court for the District of Maryland.


Please consider this analogy from a fellow retiree: If someone steals the Ford truck you worked for years to obtain and then that someone, whatever their rationale, replaces it with a bike with a broken wheel, faulty hand brakes, a bell pretending it’s a horn, and a rain hat for a roof, would that blind you to the fact that the truck was stolen? Probably not.

Thank you to the many Senators and Delegates who co-sponsored the legislation that would have reversed this theft. HB98/SB193 would have reinstated Medicare-eligible retirees’ promised prescription drug benefit. It is truly regrettable that the Fiscal Note for those bills, carefully crafted by DBM and DLS, could not be reviewed more closely. Known facts were ignored and others “spun” beyond recognition; other ‘facts’ were cherry-picked to obtain the desired outcome:

HB98/SB193 was pronounced “unaffordable” even though the State’s own information could have been compiled to demonstrate the opposite, as well as to recommend affordable management of the State’s OPEB liability. The ‘carefully edited’ GASB information provided by DLS and DBM conveniently neglected to include significant relevant information that should be – and should have been – considered by governors and General Assembly members all along. According to GASB, in a cost-sharing pension or OPEB like Maryland’s, “the plan assumes from the individual employers the responsibility to fund promised benefits. … the individual cost-sharing employers incur liabilities to the plan for the contractually required contributions assessed to them by the plan as their share of the aggregate funding requirements for specified periods.”

GASB Staff Technical Bulletin, “Recognition of Pension and Other Postemployment Benefit [OPEB] Expenditures/Expense and Liabilities by Cost-Sharing Employers”- December 2004, retrieved 3/17/19)

Also conveniently omitted from any DLS analyst’s Note or official presentation or testimony is the fact that the oft-referenced GASB has made its position on funding OPEB liabilities exceedingly clear:

“… the GASB believes that a government has an obligation to pay OPEB based on the level of retirement benefits promised to an employee in exchange for his or her services.”

Our conclusion, based on retired experts’ review of the information available in the record, is that it is the lack of State funding of the OPEB Trust that has led to the State’s large unfunded liability. It adds insult to injury for the State to turn around and use the unfunded liability that it created as the excuse for removing retirees from their prescription drug plan, the plan that State employees were promised and to which they have contribute for 20, 30, 40 years and more.

Of course, State retirees have been calling and emailing their elected representatives. They are more than concerned: they are outraged. The original SB946 would have been a disaster, so thank you to all who worked to try to make it better. However, as currently written, a new bureaucratic tangle is going to be created, at a significant cost, in order to implement hastily-conceived work-arounds. Retirees are very aware of how healthcare and insurance interfaces and programming works, more so than any Senator, Delegate or current employee who has yet to face those realities. The still-evolving patchwork of so-called “fixes” will be a nightmare to code, and there is no incentive for any of the commercial Medicare D plans to work with the State on the necessary programming, testing, and upkeep without charging a premium, thus adding to the cost for both the State and its retirees. SilverScript does it now because they have a contractual relationship with the State as its sole Medicare Plan D provider. That relationship will cease to exist with SB 946.

As Members know, State Medicare-eligible retirees are already on a Medicare D plan, but one with much lower drug prices than any of the commercial plans. And DBM and DLS have themselves pointed out that the current plan provides a multi-million-dollar subsidy to the State: the State’s loss will be $73.4 million in 2021. (Analysis of the FY 2020 Maryland Executive Budget, 2019, p. 22) With this bill, benefits are diluted, and costs go up for Retirees. This has happened before, and retirees have absorbed the changes. Stripping Medicare-eligible retirees of their long-time prescription drug plan, however, will be devastating. SB946 Revised is intended to buffer the devastation.

But the bill’s implementation, the reimbursement details, and any ‘what-if’  contingencies are still written on the back of an envelope, if anywhere. The more than 45,000 State retirees have looked into the Medicare Plan D  marketplace: they scrambled to do so when they were told in last summer that they must. That is exactly why they are afraid that they will have to forgo or ration medications due to an inability to pay out of fixed incomes as a result of what looms as unforeseeable and insurmountable costs. They are afraid that instead of managing their lives and their healthcare in retirement, their careful planning and budgeting has been for naught and their futures (and their families’ futures) are in jeopardy.

So, yes, SB946 Revised is improved from the original. It still falls woefully short of what was earned by State Retirees, as a federal judge seems to suspect. Full restoration should have been the answer. But meanwhile, a fuller, careful review by a study group or task force will help ensure that SB946 actually  provides the failsafe protections intended by the Members of the House and Senate.

Sincerely,

Peta N. Richkus
Towson, MD

MD Secretary of General Services, Jan 1999 – Jan 2003
Commissioner, Port of Baltimore, MD Port Administration, Jul 2008 – 2014

5 thoughts on “Last Chance Missed to Rectify State Retiree Drug Benefit Theft?

  1. Thank You For Your Commitment To The Battle Of A Lifetime That We, Former State Employees, Are All Facing! I’m a recent breast cancer survivor and I never dreamed that I would be concerned about paying for my medication during my retirement years. Politicians who steal money from the very folks who put them in office should be ashamed of themselves and should be held accountable as we would be, had we stolen money that did not belong to us. All The Gall!

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  2. Can you help me understand what the latest “wrinkle” is re: this lawsit. Saw this post by Ken Fitch 3 days ago: ‎Ken Fitch‎

    to

    WE Matter RXdrug Coverage Group
    June 30 at 11:13 PM ·

    Legal Update – Motion to Intervene filed
    It has come to my attention that a Motion to Intervene was filed in our case. I talked to the attorney and she said that this occurs when other persons who are not a party to the lawsuit wants to join in. In a class action scenario it could be other persons who are injured by the Defendants but are not part of the class definition.
    But that is not what happened here. A motion to intervene was filed on behalf of some of the administrators of another site stating they want to intervene to remove me as the Proposed Class Representative and remove Deborah Hill as the attorney for the proposed class. It is odd that seven of the people that signed on to this motion are also attorneys who retired from the Attorney General’s office. That’s who is fighting us in Court- the Attorney General, so I wonder if they have the best interests of the state retirees at heart. So it looks like we have to fight the Attorney generals office on two fronts now. Well nothing worth fighting for is ever easy. I knew that fighting to reinstate our benefits would be hard, I just didn’t realize I would be fighting against people that I worked so hard for.
    Remember -WE MATTER
    Ken Fitch

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