House budget creates new prescription plan for retirees, doubles some vehicle fees, and protects transportation fund

By Megan Poinski

Casper Taylor House Office Building

In nine hours of voting Friday the House Appropriations Committee approved the $34 billion fiscal 2012 budget, making major changes in retirement plans, creating a new prescription plan for retirees, and increasing some vehicle-related fees.

It also added a requirement that funds can only be borrowed from the transportation trust fund in the future with a five-year repayment plan, and altered how hospital assessments are calculated.

Without discussion, and often with a single unanimous voice, the panel rejected some more controversial proposals including:

•  Splitting teacher retirement costs 50-50 between the state and local jurisdictions.

• Assessing new fees to drivers with points on their licenses and with DUI convictions.

• Repealing the tax credit on Maryland mined coal.

The budget and the Budget Reconciliation and Financing Act that implements changes in funding formulas goes to the full House of Delegates Monday night, a week behind schedule. It includes a $58 million increase in education funding approved by a subcommittee last week.

Higher vehicle fees

O’Malley’s proposed budget took $100 million out of the transportation trust fund for highways and transit and moved it to the General Fund and the Rainy Day Fund. Bills are pending in both houses that would amend the Maryland Constitution so that the fund cannot be raided for other purposes, as O’Malley and previous governors have done.

The Appropriations Committee approved the transfers in this budget, but established policies to replace that money and raise some new funds.

The the committee doubled fees for vehicle title certificates – from $50 to $100 — and for vanity license plates – from $25 to $50. The increase in title certificates is expected to generate $50 million in new revenues, while the vanity license plate increase is expected to raise more than $2 million.

The committee’s actions would also add a one-time increase of $13 million to highway funds for local jurisdictions, with $8.3 more going to municipalities and $5 million more going to counties. The money would come from the Maryland Transportation Department’s share of highway user revenues, not the transportation trust fund.

Increased hospital fees

One of the significant cost cuts in Gov. O’Malley’s budget proposal was taking $372 million from Medicaid, and replacing it with a new hospital care assessment. In Maryland, the Health Services Cost Review Commission sets costs for treatment at hospitals throughout the state. The costs are the same regardless of a person’s insurance – private or a public plan like Medicaid – and are adjusted annually.

The commission also has authority to add assessments to the hospital treatment costs. O’Malley’s plan also would have split higher costs for care at the state’s two university teaching hospitals among all of the state’s hospitals.

Committee members voted for a funding formula that instructs the Health Services Cost Review Commission to change the rates, but does not spread the costs for teaching hospitals to other institutions. The net result is that now the commission must adjust the assessment to raise almost $390 million more.

Prescriptions for retirees

The prescription plan for retirees approved by the committee was suggested by the House Health and Government Operations Committee. It offers a “middle way” between the prescription insurance benefits retirees currently have – identical to what current employees get – and the O’Malley administration’s proposal to eliminate prescription insurance coverage to retirees who are eligible for Medicare Part D. Health subcommittee chair Mary-Dulany James called it a “transitional change for retirees”

The new plan basically would give retirees the same coverage, but increase their premiums, co-pays and out-of-pocket caps more gradually than the administration’s proposal. It would also save the general fund $12 million — $10 million less than the savings offered by the administration’s plan.

Currently, employees and retirees pay 20% of the premium. The new proposal would increase that to 25%. The retirees would keep a zero deductible, but their costs would increase somewhat:

•  Co-pays would increase for generic drugs from $5 to $10. They would go up $10 for preferred brands, from $15 to $25. Non-preferred brands would cost $40 instead of $25.

•  The out-of-pocket cap would increase from $700 for both the retiree and spouse to $1,000 for the retiree only, and $1,500 for the retiree and spouse.

•  Annual premiums for retirees only would increase to $593, up from the current $474. This would break down to $49 a month, about $10 more than what it is now. For a retiree and spouse, the premium would be $984 a year, up from $787 — about $16 more than it is now.

About The Author

Len Lazarick

Len Lazarick was the founding editor and publisher of and is currently the president of its nonprofit corporation and chairman of its board He was formerly the State House bureau chief of the daily Baltimore Examiner from its start in April 2006 to its demise in February 2009. He was a copy editor on the national desk of the Washington Post for eight years before that, and has spent decades covering Maryland politics and government.

1 Comment

  1. robert rowley

    will we this push out the change for 2020, to go on plan d.