$31 million mystery: unpaid medical bills State worker raise put in jeopardy?


The governor's budget secretary told legislators yesterday that his office has uncovered at least $31 million in state employee medical bills dating to 1992 that the Department of Personnel apparently failed to pay.

But budget officials -- acknowledging that they are skeptical about the accuracy of figures supplied by the Personnel Department -- said it is unclear how much of the money owed to Blue Cross and Blue Shield of Maryland is part of a previously estimated $40 million cost overrun in the employee health insurance program this year.

"We're trying to verify the numbers," said Deputy Budget Secretary Frederick W. Puddester.

State budget officials assumed responsibility for the health insurance program only last week, after an incensed Gov. William Donald Schaefer stripped it from the Personnel Department. Mr. Schaefer was angered by the department's proposed fivefold increase in some state employee health premiums, a proposal he said he knew nothing about and which he halted almost as soon as he learned of it.

Charles L. Benton Jr., the governor's budget secretary, told the House Appropriations Committee that personnel officials "knew or should have known" that the state owed the $31 million when the current year's budget was under consideration by the General Assembly this past spring.

But he said that no mention of the obligation was made to him or to lawmakers.

Legislators reacted with disbelief. Several said they are worried that the unexpected debt could wipe out money they had hoped would be used for a 3 percent pay raise next year for state employees.

They said it also could force up health insurance premiums for employees and could jeopardize the state's most popular, but most expensive, health insurance program, called the Preferred Provider Network.

The state spent $253 million on health insurance for its employees last year, budgeted $261 million this year and projected the program to cost $305 million next year.

But this year's cost now is expected to be at least $301 million, and the projection for next year is now up to $380 million, Mr. Puddester said.

"Let's be honest with each other," said committee Chairman Howard P. Rawlings, D-Baltimore. "Things really don't look that good."

No one from the Department of Personnel appeared at yesterday's briefing. Secretary Hilda E. Ford was having dental work done, Mr. Rawlings said, and calls to her office were referred to the governor's press office.

In a rare public display of disharmony between Cabinet departments, Mr. Benton complained of his inability "to get meaningful data" from the Personnel Department.

Later, he specifically blamed Assistant Secretary Catherine K. Austin for the problem with unpaid medical bills.

"I think it is directly attributable to the head of that unit who failed to give us the information," he said.

Ms. Austin, who has been relieved of all duties regarding the employee benefits program, could not be reached for comment.

Despite the problems, Mr. Puddester said, the administration still hopes to have an "open-enrollment" period for state employees to choose their health insurance plans for the coming year beginning in mid-November.

But John F. X. O'Brien, executive director of the Maryland Classified Employees Association, said that employees would be better served if the state took the time to thoroughly examine the figures before proposing a program.

D8 "They should put it off and do a good job," he said.

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