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City plans to stop paying for Medicare prescription drugs

Cut to city's prescription drug coverage, made possible by Obamacare, could save $17.3 million a year

Baltimore officials this week sent about 40,000 letters to city employees and retirees, telling them the city will no longer pay for prescription drugs under Medicare as of 2020.

City officials are touting the move -- which they say is made possible by President Barack Obama’s Affordable Care Act closing a coverage gap that Baltimore supplemented --  as a way to save millions for cash-strapped Baltimore. But union workers are criticizing the plan, which they argue could drive up costs for some seniors who’ll need to find coverage in the private market.

“The changes in the Affordable Care Act make it no longer necessary for the city to provide supplemental prescription drug coverage as of 2020,” said Andrew Kleine, the city’s budget director. Kleine acknowledged that some seniors could pay more after the change.

“It will depend a lot on to what extent they use brand name versus generic drugs,” Kleine said. “The more generics you use, you could end up paying less. The more brand-names you use, you could end up paying more. We think, on balance, most retirees won’t see significant change in their costs.”

Because the federal government is phasing in the increased coverage, Baltimore is beginning to see health care savings. City officials say they project saving between $7.4 million and $9.2 million a year between 2016 and 2019.

Once the city stops paying for prescription drugs under Medicare in 2020, officials expect to save $17.3 million for the city budget.

The plan is the latest in a series of cuts and overhauls of the costly municipal health care system, including an audit that cut 1,600 spouses, children and others from coverage and programs requiring city workers to pay more while incentivizing cheaper drugs. Maryland Stephanie Rawlings-Blake said last year that nearly half of Baltimore’s municipal employees and retirees have a “critical or chronic” illness — a distinction that contributes to the high cost of providing their health insurance.

City officials say their policy changes have reduced the unfunded liability for health care from $2.5 billion to $1.3 billion.

“The whole series of reforms we made are saving us $100 million a year,” Kleine said. He added the budget office has more plans to cut down on prescription drug costs, noting the city pays about $1 million a year for erectile dysfunction pills for its workers and retirees.

Glenard S. Middleton, whose union represents many city workers, said the cumulative effects of the city’s health care cuts have hurt retirees.

“The average worker that is retired now is living paycheck to paycheck,” he said. “These are folks who gave their lives to the city. If they have to go out on their own, it’s not going to be as good of coverage.”

Kristin Barcak, the city’s 10-year financial plan project manager, said the Affordable Care Act could provide more desirable coverage for some seniors.

“They’ll have more flexibility in the marketplace,” she said. “They can choose a plan that best meets their needs.”

lbroadwater@baltsun.com

Twitter.com/lukebroadwater

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