Seeking to moderate rising premiums for health plans offered by small employers, a state commission raised yesterday the costs to employees for many prescription drugs covered by such plans.
"There's no easy way out of this," said Dr. Donald E. Wilson, chairman of the Health Care Access and Cost Commission. "Everybody's going to end up with higher premiums or higher out-of-pocket costs -- or with no insurance at all."
Under the law creating the commission and giving it the power to regulate small-employer health plans, average premiums cannot exceed 12 percent of the average wage in Maryland. When costs approach the ceiling, as they have been projected to do, the commission has to trim benefits.
Concerned that higher premiums would push some employers to drop health insurance altogether, the commission also rejected proposals to include additional benefits, such as coverage of smoking-cessation programs.
"This is one of the most agonizing things I've participated in," said commission member Ernest Crofoot as the panel considered the suggested benefits. "All these things are good things, but there aren't the bucks there to pay for them."
As part of the effort to moderate premium increases, the commission voted to switch from a $15 co-payment for all types of prescriptions to a three-tier system, with co-payments of $15 for generic drugs, $20 for "preferred" name-brand drugs and $30 for all other prescriptions.
Nearly half a million Marylanders are covered under the small-employer policies. Insurers who offer the small-employer policies must include the standard benefits, but can offer coverage in an HMO plan, point-of-service (HMO with some out-of-network benefits), preferred provider plan (members must stay in the network, but without HMO "gatekeeper" requirements) or traditional indemnity plan.
The Health Care Access and Cost Commission also voted yesterday to increase deductibles for the preferred-provider plans, which cover about 150,000 Marylanders.
Individual deductibles -- for all coverage -- will increase to $600 from $500, and the family deductible increases to $1,200 from $1,000.
The commission is expecting premium increases ranging from 6 percent for HMO coverage to 10.5 percent for indemnity policies this year, and from 7 percent for HMOs to 14 percent for indemnity plans next year.
Without the increases in deductibles and co-payments, the commission projected premiums next year would reach about 92 percent of the ceiling -- up from the current 84 percent.
"By acting now" on deductibles and co-payments, said commission Executive Director John M. Colmers, "we're anticipating that there are going to be problems in the future, and the steps we would have to take next year or two years from now would not have to be as drastic."
State regulation of the small-employer market began in 1994, in an attempt to make insurance more affordable for small companies and reduce the number of uninsured. The commission considers the effort successful, as the number of people covered by the plan has grown from 402,000 in 1995 to 489,000 last year.
Actuaries projected that the increased pharmacy co-payments would reduce premiums by about 2 percent below what they would otherwise have been, and increasing the preferred-provider deductible would save about 1 percent.
The three-tier pharmacy is also being adopted by insurers for many large-employer health plans. Prescription costs are the most rapidly increasing component of health-care inflation, with some insurers experiencing 20 percent increases this year.