The Board of Estimates took a small step toward controlling rising health-care costs yesterday by dropping two of the HMOs available to Baltimore City employees and requiring retirees to pay a larger share of their medical costs.
Both changes, which affect thousands of city workers and retirees, had been recommended this month in a consultant's study of ways for the cash-strapped city to cut its health-care costs. The consultant's report detailed proposals for saving the city about $20 million a year.
"These are tough decisions, make no mistake about it," Mayor Martin O'Malley said at the board meeting. "These are going to affect a lot of families."
But, he said: "It's better to get a hold of our health costs now, than four years later being in a position where we're forced to lay off employees."
City union leaders argued against the HMO decision, which affects thousands of public employees covered by Free State Health Plan and United Health Care. They wanted the board to put off its decision.
"The labor unions have worked with the city to be about change," said Glennard S. Middleton Sr., president of the American Federation of State, County and Municipal Employees Council 67. "When you do something like this and jam it down our throats, it leaves a bad taste."
O'Malley said he was "disappointed" that union leaders wanted a delay.
"These issues have been coming at us with all the subtlety of a freight train," he said. "This is a decision that has been deferred for far too long."
The board also approved changes in the health plans for city retirees, requiring them to pay more for their prescription drugs and $5 toward doctor visits.
Starting in January, retirees using Blue Cross Blue Shield PPN and Traditional Medical Plans will have to make a $5 co-payment for doctor visits. Prescriptions will also cost more under new formulas that will go into effect next year and in January 2002.
The changes in the health plans for retirees mirror those in the recent Police Department contract and could save the city $1.8 million in prescription drug costs next year.
Last year, retirees filled more than 600,000 prescriptions.
Baltimore City employees enjoy better health benefits than those of surrounding governments and private companies, costing city taxpayers an extra $20 million a year, according to the recent study.
Bolton Offutt Donovan Inc. of Baltimore conducted the review and recommended that city workers pick up a larger share of health care costs.
The 47-page, $75,000 report was paid for by the city, the Goldseker Foundation and the Baltimore Efficiency and Economy Foundation (BEEF), a new nonprofit arm of the Baltimore Homeowners Coalition citizens group.
Of critical concern is the swelling number of city government retirees, outpacing active employees by 19,000 to 16,500.
The city plan is so good that many retirees hold onto city benefits despite having other plan options for themselves and their families, including the state, the report said.
"The city plan ranks higher than almost every comparative group - public and private," Ross L. Coffey, who conducted the study for BEEF, said of the city benefits.
The citizens coalition has been recommending ways for the city to save money during the past several years in hopes of seeing a city property tax cut. Baltimore faces a projected $59 million budget deficit during the next three years because city spending is outpacing revenue.
The report recommends that, to reduce health coverage costs, Baltimore should:
* Move to managed health care. Because most city employees receive premium Blue Cross/Blue Shield coverage, Baltimore could save up to $8 million a year by offering managed care. The city pays 42 percent higher health care costs than surrounding jurisdictions with more managed-care options.
* Require office co-pays. Baltimore remains one of the few employers in the region that don't require workers to provide an office co-pay with a doctor's visit. Doing so would save the city $2 million a year, the report said.
* Tighten accessibility to the city plan. Currently, any employee who retires with 10 years of city service is eligible for full retirement health benefits. Coffey recommends that retiree costs be calculated on a graduated scale where employees with 30 years' service would pay less for coverage than those with less seniority.
* Require a premium for prescription coverage. Although city employees and retirees face a small co-pay when purchasing prescription drugs, they do not pay a premium to belong to the plan, as do other area workers. Doing so could save the city $7 million a year, Coffey said.
The study also took into account the city school district's health care coverage. According to the report, a savings of $10 million would result from combining the two plans and eliminating any redundancy.
Coffey acknowledges that getting city workers to give back their excellent health coverage will be difficult.
Leaders of the city's five major unions said the benefits were granted in years when the city could not afford pay increases.
Workers shouldn't be forced to return them, union leaders say.
"I'll be the first to say that we have great benefits," Baltimore Fire Officers Association President Stephan G. Fugate said. "But we earned them."