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Maryland Politics
Posted at 05:35 PM ET, 03/18/2011

Md. House reworks O’Malley pension plan, lowering retiree health-care costs

Since Gov. Martin O’Malley in January married pension reform with negotiations over this year’s state budget, public employees and retirees have inundated Maryland lawmakers with thousands of calls, letters and the largest State House protest in more than a decade.

On Friday, lawmakers on a key House subcommittee responded with a plan that would significantly lower state retirees’ out-of-pocket prescription drug and other costs contained in O’Malley’s pension plan.

Initially, the lawmakers’ more lenient plan would save the state about half of what O’Malley (D) had envisioned. But over the next decade, the two would save Maryland almost the same amount, analysts said, by moving state retirees to Medicare Part D prescription coverage in 2020.

That’s the same year O’Malley proposed shifting state retirees to the federal prescription plan, at a savings to the state of almost $6.3 billion.

Under the lawmakers’ plan, which the full House Appropriations Committee is expected to vote on late Friday, retired state employees would face higher prescription drug co-pays and higher insurance premiums.

But a proposed annual cap on retiree drug costs of $4,550 would be reduced to $1,000, and other out-of-pocket costs would also be reduced. Currently, state employees’ out-of-pocket cap is $700.

The plan would also eliminate an option in O’Malley’s proposal to either let current employees pay more for the same pension benefits or opt to pay the same as they do now and receive less in retirement.

All state employees would be required to increase from 5 percent to 7 percent the amount they set away to fund the state’s pension system.

Maryland would also begin charging counties to administer public employees’ retirement systems. Statewide, the maneuver would generate about $17 million for the state.

Maryland’s pension system has fallen from over 80 percent funded to about 59 percent. The state has been setting aside less than 1 percent of its expected retiree health-care costs.

By  |  05:35 PM ET, 03/18/2011

 
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