The Boston Globe
Sunday, February 23, 2003
Raising taxes won't fix Bay State woes
By Jeff Jacoby
A few months ago, the left-wing lobby long known as TEAM
changed its name to the Massachusetts Budget and Policy Center, perhaps because the
TEAMsters were tired of the quip that their acronym stood for Tax Everything
And More.
It really stood for Tax Equity Alliance for Massachusetts,
but as a summary of TEAM's philosophy, "tax everything and more" would be hard to improve on.
Over the years, the only thing in Massachusetts more dependable than TEAM
coming out for higher spending has been TEAM coming out against lower taxes.
TEAM opposed almost every significant tax cut of the last 15 years, invariably
arguing that the money was more urgently needed by the state than by taxpayers who had earned it.
The liberal leopard hasn't changed its spots. Last week, the
renamed organization released a report on "The Role of Taxes and Spending in the Fiscal
Crisis." Sure enough, it was preaching the same old sermon: The Bay State's
problems were caused not by spending too much but by taxing too little.
"It is clear," write James St. George and Sarah Nolan, the
report's authors, that during the 1990s "the state's top priority was cutting taxes." This will come as
news to those who remember the exertions Beacon Hill went to not to cut
taxes - the budgets that grew by as much as a billion dollars a year, the
enlargement of the "rainy-day" fund to forestall an automatic tax cut, the
repeated refusal to undo "temporary" income tax hikes dating back to the
Dukakis administration. Tax revenues flooded the Treasury in record-smashing waves, but as
far as the lobby-formerly-known-as-TEAM is concerned, taxes weren't nearly high enough.
So naturally it recommends making them higher.
"Tax increases to compensate for the overly ambitious tax
cuts of the 1990s must be part of any solution to the state's fiscal crisis," the authors write. They
make it clear that they are calling for tax increases over and
above the huge ones enacted last year.
It wasn't enough, in other words, to repeal the income tax
rollback passed by overwhelmingly by the voters, to abolish the charity deduction, to shrink the
personal exemption by $1,100, to double the tax on cigarettes to $1.51 a pack,
to jack up the fee for renewing a driver's license or registering a car, to
sharply hike the tax on capital gains, to charge nursing home residents who pay their
own bills an additional $3,300 a year, to add $5 to every speeding ticket, to
increase filing fees for all legal documents, and to impose a $1.50 tax on drug
prescriptions. It all added up to the largest tax hike in Massachusetts history,
but Nolan and St. George say it wasn't enough.
They also say the Commonwealth's budgets have been too
stingy. "Massachusetts spends a smaller share of its total personal income on state and
local services than most states," they claim. "Only five states in the nation
commit a smaller share of available resources to public services than does
Massachusetts." State budget growth, they lament, has been lagging behind the
growth in personal income.
The planted axiom in this argument is that in good times,
when companies are hiring and incomes are rising, government spending should rise too. Does that
mean that in not-so-good times, when workers are being laid off and belts are
getting tightened, government spending should be reduced? No, the authors
certainly don't say that. TEAM may have altered its name, but its goals
remain fixed: Rain or shine, boom or bust, it wants spending to go up - and
taxes to stay up.
Fortunately, the Cato Institute, a noted D.C. think tank,
has just issued a monograph that highlights some of the numbers that TEAM - sorry, the
Massachusetts Budget and Policy Center - elides. The center's report never
gets around to mentioning just how much money the state ran through during
those supposedly stingy 1990s, but the Cato study, which crunches the numbers for all 50 states, does.
In 1990, Massachusetts took in $9.37 billion in tax revenue.
By 2001, it was collecting $17.23 billion - an increase of 84 percent. Only 44 of that 84 percent
was needed to keep pace with inflation (plus population growth). The remainder - $3.76
billion, or $1,509 a year for every household in Massachusetts - was a windfall to the state. Only five other states helped
themselves to a larger bonus from taxpayers' pockets. Needless to say, Beacon
Hill spent every penny it took.
The Cato study also looks at each state's budget history.
Between 1990 and 2001, inflation-adjusted per-capita spending by the Commonwealth of
Massachusetts rose 31.8 percent. It was the eighth-highest increase in the
nation.
The notion that the state would be facing fewer fiscal
problems today if only it had levied steeper taxes and spent even more money is, to put it politely,
eccentric. "Tax everything and more" was lousy advice in the 1990s. It's an
even worse prescription today.
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The Boston Globe
Friday, February 20, 2003
Birmingham OK'd payments to 4 key aides
By Rick Klein, Globe Staff
Four days before he left office, with the state facing a
fiscal crisis, Senate President Thomas F. Birmingham quietly handed out payments totaling about
$214,000 to four top Senate staffers who helped out on his gubernatorial
campaign.
The payments were recorded by the state as compensation for
unused vacation time. One Birmingham staff member, fiscal director John
McGinn, received $88,700 - equivalent to 53 weeks of pay, according to state records.
Birmingham's chief of staff, Ted Constan, received $50,163 for 30 weeks of
unused vacation time, and Constan's wife, press secretary Alison Franklin, was
paid $29,898 for 18 weeks.
Christine Carroll, Birmingham's executive assistant, was
paid $44,848, the equivalent of 27 weeks of pay. All of the payments were processed on Dec. 28;
Birmingham's term ended Jan. 1, and all four left state government with
Birmingham.
The staff members say they saved up the vast amounts of
vacation time because, throughout their years of service to Birmingham, they worked long
hours and accumulated numerous weeks of compensatory time, and exclusively used that comp time
when they took vacations and other days off.
Because of a little-known provision in Senate rules, the
veteran legislative employees are not subject to the regulation that prohibits almost all other state
workers from carrying forward vacation time for more than two years. In
addition, Senate policy leaves it up to individual senators whether to
grant comp time to staffers, and how to administer it. In Birmingham's office, staffers
built up huge amounts of comp time, and used that in lieu of vacation time each
year.
The Senate employees are allowed to receive cash payments
for their unused vacation time when they leave their jobs, but cannot cash in their comp time.
Birmingham said yesterday that his aides were entitled to
the money, adding that he considers the large sums they received a testament to how hard they
worked over the years.
"We applied exactly the same criteria to them that we did
for anyone else," said Birmingham, a Chelsea Democrat who is now practicing labor law with the
Boston firm Krakow, Souris, and Birmingham. "This is for a large of amount of
work. They earned this, and retrospectively, I couldn't take it away."
However, Pam Wilmot, executive director of Common Cause
Massachusetts, a government watchdog group, criticized the payments.
"It certainly gives the appearance that someone's getting a
golden parachute," said Wilmot. "It looks like favoritism. I'm sure these are very hard-working
people, but the bottom line is that legislative employees should be living by
similar rules to other state employees ... this would never happen in the
private sector."
The Senate changed the rule covering carried-over vacation
time in 1997, amending it to mimic the regulation for other state workers who are only
allowed to carry forward time for two years. But the four staff members in
question all started working for Birmingham before the rule was changed, and
they were grandfathered in, allowing them to carry forward vacation time
without limit.
Franklin said that all four workers compiled so much comp
time working on Senate business that they were able to put aside vacation time even while
taking trips over the years, she said.
"It was a hard-working office, and we took our jobs and the
responsibilities seriously, and that often meant long hours," Franklin said.
McGinn, who joined Birmingham on the Senate Ways and Means
staff in 1993, said the nature of his job was such that he compiled enormous amounts of comp
time but couldn't use it all in any year. He said he regularly took three or four
weeks off per year but never dipped into his vacation time in 10 years.
"You had to use the comp time in the years that you
accumulate it, or you'd lose it," said McGinn, who is now finance director for the city of Somerville.
"For the amount of comp time that I was accumulating, it was impossible for
me to even use what I was accruing. All I took was what was legally owed to
me."
All four staff members who received the payments were making
$86,371 a year - the highest salary for any Senate staffer, and more even than
Birmingham and House Speaker Thomas M. Finneran made last year in their
state posts. The additional funds, which totaled $213,617 for the four, were
paid out of the Senate budget. The payments to the four represent 1.3 percent
of the Senate's $16.6 million budget for fiscal 2003, which runs through June
30. Birmingham's successor, Senate President Robert E. Travaglini, declined to
comment through a spokeswoman on how the expense was managed.
As Senate president, Birmingham had wide discretion over how
to spend funds earmarked for the Senate. He set the salaries for his employees, and signed off
on the payments for their unused vacation time to the state comptroller's
office.
Franklin said the Senate president's office was meticulous
about keeping track of hours worked by staff members, with everyone in the office filling out daily
time sheets detailing the hours worked and comp time accrued. Twice a year,
all staff members received reports showing how such comp, vacation, and
sick time was available to them, she said.
The aides used comp time when they helped out on Birmingham's campaign,
she said. While none of the four had a formal position with the campaign, all
were involved to some extent. Carroll regularly traveled with Birmingham to
campaign events, and Franklin and Constan served as informal advisers during
the campaign and pitched in as supporters at events, and McGinn and his wife
were Birmingham delegates at the state Democratic Convention last year.
Birmingham was elected to the state Senate in 1990, and
succeeded William M. Bulger as Senate president in 1996. After losing the Democratic primary for
governor last September, he was forced to give up his Senate seat, since he
could not seek reelection to the Senate while running for governor.
While the money in question is small in the context of a $23
billion state budget, the fact that so many Birmingham staff members received such large
checks should persuade lawmakers to exert tighter control over the legislative
payroll, Wilmot said.
"It's a small amount of money, but everybody's counting
their pennies these days. People are being laid off, people are working overtime and not getting
paid," she said. "As with all issues, having a predictable, verifiable, transparent
process is the key."
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The Boston Globe
Saturday, February 22, 2003
Romney decries payments made to Birmingham aides
By Rick Klein, Globe Staff
Governor Mitt Romney yesterday denounced hefty payments made
to four top aides to former Senate President Thomas F. Birmingham, calling them an
"offensive" use of tax dollars and a glaring example of why people have lost
confidence in state leaders.
"The concept of state workers and state employees getting
payments of this nature is just one more thing that people find offensive about the way business
is done on Beacon Hill," Romney said. "It's just one more thing that infuriates
me and the taxpaying public."
Romney was responding to a report in yesterday's Globe
detailing about $214,000 in payments sent to four top Birmingham staffers as buyouts for
unused vacation time. One staff member received $88,700 for unused vacation
time - more than an entire year's salary, for 53 weeks of unused vacation.
Other checks for $50,163, $44,848, and $29,898 also went out. The payments
were made just four days before Birmingham left office Jan. 1.
The employees accrued the time over the years by building up
large amounts of compensatory time, and then using comp time instead of vacation days to
take time off. Senate employees hired before 1997 are allowed to build up
unlimited amounts of vacation time, and are bought out for that time at regular
salary levels when they leave state employment.
Birmingham yesterday lashed back at Romney, saying that his
background engineering leveraged buyouts of companies makes him insensitive to terms of
employment that are offered workers. The aides who were paid for the unused
vacation time were exceptionally hard-working, he said, and were entitled to
the money. They put in so many extra hours that they left state service with
80 weeks of comp time among them - time for which they were not compensated.
"The fact that Mitt Romney, with his corporate raider
background, isn't sensitive to the entitlements an employee has, doesn't surprise me," said
Birmingham, who is now in the private sector as a labor lawyer after losing the
Democratic primary campaign for governor. "This group of employees came in
with a different employment package, and I wasn't going to dishonor the
entitlements that they had accrued."
Romney stopped short of calling on the aides to return the
money, saying that Senate policy allowing them to build up vacation time must be legally honored.
But a system that allows unlimited comp time and the building up of vacation
time should never have existed in the first place, he said. Employees of
the governor's office cannot receive comp time or carry over vacation time from
year to year, Romney said.
"The idea of paying people a half a year's salary or a full
year's salary by rolling up the supposed comp time and rollovers I think is wrong, and is not something
we're doing in the governor's office," the governor said. "We do not allow
that, and we also allow for no carry-over of vacation or sick days from one year to
the next."
In 1997, Senate policy was changed to mimic regulations for
most other state workers, meaning employees hired starting in 1997 can carry forward only two
years' worth of vacation time. But the Senate still allows staff members to
accrue comp time.
Employees of the state House of Representatives can carry
forward vacation time for just two years before they lose the unused time. House rules do not
allow for the granting of comp time.
"People who work in the House of Representatives work on
salary," said Charles Rasmussen, a spokesman for House Speaker Thomas M. Finneran.
"Our rules are fairly hard and fast on that."
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The Boston Herald
Friday, February 21, 2003
Romney takes on state lawmakers' sacred cows
Analysis/by Elisabeth J. Beardsley
Beacon Hill's feel-good era of cooperation is headed for an
abrupt end as Gov. Mitt Romney, inch-by-inch, tries to tighten a noose around the sacred cows
that compose state lawmakers' power base.
Legislators of all stripes shuddered when Romney laid out a
plan to blow up the notorious patronage haven of the Metropolitan District Commission, but
shrugged it off when their leaders shot it down.
An undaunted Romney yesterday brought the hammer down on
another favorite legislative sandbox, the bloated judiciary - where lawmakers have
been stashing buddies for decades.
And, with next week's release of Romney's inaugural budget
proposal, Romney appears bent on pushing his campaign promise to "clean up the mess" into
reality.
Yesterday's salvo against the court system goes to the heart
of lawmakers' most precious power - rewarding friends and punishing enemies, while showing
the folks back home they can "deliver the goods," said Massachusetts Lawyers
Weekly Editor David Yas.
"If all of the power goes back to the courts, then they lose
some of that clout," Yas said. "It remains to be seen whether this is going to pass. There are
certainly reasons as to why it might not."
And this is just the beginning.
Romney's forays will go beyond the MDC and the courts, as he
prepares plans to target the sweeping state transportation bureaucracy and the budgets of
other constitutional officers and shake up the higher education system - where
even the powerful University of Massachusetts president, William
Bulger, might not be safe.
From the legislative perspective, the most chilling aspect
of Romney's sudden, multi-front assault is its impersonal nature. Romney, it seems, targets things
he's identified as broken without regard to political dynamics.
The substance-based approach leaves lawmakers no room to
point the usual fingers, bray about personal attacks or accuse Romney of playing partisan
politics.
"It's not targeted at any one individual or group of
people," a senior Romney administration official said. "It's being done on behalf of the 6 million people
who are the citizens of Massachusetts."
To date, Romney has pursued a gentleman's strategy for
dealing with lawmakers whose pet projects he's lining up for the chopping block.
While he hasn't shied from highlighting the Legislature's
worst habits, Romney has refrained from pillorying legislative leaders in public - even when he could
have grabbed an easy headline.
Meanwhile, behind the scenes, Romney and his top officials
are working hard on "outreach," bringing lawmakers into the loop on major proposals before they
hear about it in the media.
The strategy has worked well so far, buying pledges of
open-mindedness from legislative leaders, and an early surprise victory for Romney when lawmakers
ceded unprecedented budget-cutting powers last month.
But even in the conflict, Romney supporters see hope.
While the resistance to his reforms is strong, the overwhelmingly Democratic
lawmakers are in the uncomfortable position of either abdicating their powers
or defending a status quo that only leads back to tax hikes, said House
Minority Leader Brad Jones.
"They're going to be between the rock and the hard place,"
Jones (R-North Reading) said.
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The Boston Globe
Saturday, February 22, 2003
Romney's TV address to explain fiscal plans
By Rick Klein, Globe Staff
Taking a strong antitax message directly to the people,
Governor Mitt Romney is set to deliver a televised address on the eve of the release of his state budget
plan, in a hastily organized event his aides are billing as his "State of the
State" speech.
Romney will appear in a 250-seat theater on the campus of
Suffolk University on Tuesday evening, where he will explain the outlines of his approach to the
state's fiscal crisis, said Eric Fehrnstrom, his communications director. The
governor will emphasize the importance of structural changes to government
as a way to avoid perpetual tax increases, even as legislative leaders have
begun talking about raising taxes to help close a $3.2 billion budget gap next
fiscal year, he said.
"The choice is clear: We're either going to have tax
increases every year, or we need real changes," Fehrnstrom said.
The sudden decision to hold the event - plans were finalized
just yesterday, and aides were scrambling to get out invitations - reflects the Romney
administration's attempts to tightly script the rollout of budget plans, and to
appeal directly to voters to explain his moves. Last month, Romney requested
and received statewide television time to talk about his plan to cut local aid.
Although the governor has not asked for TV time for Tuesday's speech, State of
the State addresses are normally carried live by the local network affiliates.
Typically, a newly installed governor delivers an inaugural
address in lieu of a State of the State speech, but Romney and his top aides decided to break with
that tradition a few days ago, as they recognized the opportunity to lay out
budget plans before a large number of residents. Romney will file his budget
proposal with the Legislature on Wednesday.
The tight control and deliberate rollout of his budget plans
have been frustrating to many advocates for health and human service programs, who
have been rebuked in their attempts to get full details of some plans from the
administration.
The way Romney is framing his near-daily press events to
highlight budget details - he is talking extensively about restructuring government, but little
about who will be affected in the process - is a "disservice to the public," said
Judy Meredith, a veteran Beacon Hill lobbyist on health care issues.
"When he says he's protecting core services, we have no way
to assess that, because he won't give us information," Meredith said. "This is not the type of
transparent government he talked about."
Romney said yesterday he expects criticism of his plans from
advocates of state programs and members of the Legislature. But he said he is confident
that the public will stand with him when they weigh his ideas against those of
other players in state government.
"I received a ringing endorsement of my philosophy and plan
from the voters not too many months ago, and also they made some pretty clear statements
about the income tax," Romney said. "We will conclude with a budget that is
balanced, that fills a $3.2 billion gap without gimmicks, without one-time
financial transactions ... and at the same time we won't raise taxes. And that
paves the way for a stronger recovery and of programs that build jobs."
In keeping with tradition for State of the State addresses,
the governor plans to invite all members of the House and Senate, and other dignitaries. He will also
invite working families from across the state who have contacted the governor's office to say they agree with his antitax stance,
Fehrnstrom said.
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The Boston Herald
Friday, February 21, 2003
Prescription tax is still bad medicine
by Thomas Keane Jr.
Like many of you, I was shocked in January to pick up a
prescription and find I had to pay a new tax of $1.30. How'd this slip through?
So imagine my relief when I heard that, thanks to the good
efforts of Attorney General Thomas Reilly and the Massachusetts Legislature, the tax was no
more. The major drugstore chains took out full-page ads trumpeting the
excellent news. It was all a mistake! Heck, they'll even give me a refund for
amounts they had mistakenly collected.
Wait, that's not right.
It turns out the tax is still around. The state even now
figures it will collect $36 million a year. But somehow, it appears, we're no longer paying for it.
Wrong. In fact, bad as the tax seemed to consumers, the
so-called fix is worse. It's dishonest. It will place even more costs on those who can least afford it.
Moreover, it threatens to wipe out an entire segment of the pharmacy business:
independent drugstores.
The dishonest part is this: Passed with little public notice
last year, the Jan. 1 imposition of the $1.30 tax provoked a political firestorm. Instead of repealing
it, however, the state, with the attorney general in the lead, decided to hide
it. Reilly started playing tough with the chains, threatening to go through all of
their books and records. B.J.'s Wholesale Club announced right off it wouldn't
pass along the tax. Later Walgreens, a large national chain with a small
presence in the state, caved. CVS, Brooks, Stop & Shop and Shaws, quickly
followed.
That was one problem solved. The politicians were off the
hook.
But someone still pays.
If retail stores made super-high profits, perhaps it would
be the companies' shareholders. But retail, including pharmacy, is probably one of the most
competitive businesses around. Margins are thin.
Luckily for the big chains, they sell goods other than
drugs. (After all, who doesn't walk into a drugstore without also walking out with a candy bar?) So
we'll all end up paying the tax eventually - in our shampoos, razors and
over-the-counter medicines.
There's one other group that will pay as well: Those who pay
cash for their prescriptions.
Drug costs for those with insurance are tightly controlled
by contracts with health insurance companies as well as with the state. Pharmacies can't boost up
the cost of a prescription to the insured, but they can to the uninsured.
Thus, the effect of the state's crusade to save us from
having the $1.30 tax passed on? A tax that rankled because it seemed to hit the vulnerable - the sick
- will now hit those who are doubly vulnerable: the sick and poor.
But those who may very bear the highest cost are independent
pharmacies.
There are only 200 or so left in the state; the rest have
been gobbled up by chains. Yet those remaining generally have been thriving, and for good reason:
They offer services like free home delivery and know their customers by name.
They see themselves as part of the health care system and not simply as
dispensers of pills.
But they still operate in the real world. And in that world,
prices matter. So what do they do? Absorb the tax?
Doubtful. The average profit on a prescription is $1.02 -
the $1.30 tax dwarfs that. And, unlike the chains, drugs are the independents' primary business -
not just a lure to get you in to purchase a greeting card.
Those I talked to generally estimated the annual effect of
the tax at $50,000 to $75,000 a year. For many, that's the margin of their profit. For others, it
means layoffs. "I am not able to absorb the cost of this tax," says Steven
Grossman, who for 21 years has run JE Pierce Apothecary in Brookline.
As a result, most independents appear to be thinking they'll
have to pass it on. But, obviously, that puts them at a disadvantage to the chains: Their prices will
be higher.
As Michael Repucci of Inman Pharmacy in Cambridge says,
"It's a gamble." He and others, like Harvey Tabachnick, owner of Heights Pharmacy in Needham,
pray their customers will be loyal to them. They hope the extra services they
offer will be worth the higher prices they have to charge.
Perhaps. But one theory making the rounds is that the real
reason the chains yielded on the tax was that they saw it as a way to drive the independents out
of business. And regardless of whether one believes in conspiracy theories, the
fear - as a spokesman for the Massachusetts Pharmacy Association says - is
that the new tax will be the "nail in the coffin" of the independents.
Over 200 years ago, Supreme Court Justice John Marshall
wrote, "The power to tax is the power to destroy."
No kidding. Pharmacists are now seeing that first hand.
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The Boston Globe
Sunday, February 23, 2003
Expect side effects from prescription tax shift
By Bruce Mohl, Globe Staff
The state's prescription tax may have disappeared from most
pharmacy bills, but that doesn't mean consumers are off the hook.
Most pharmacies stopped charging their customers the
controversial tax on Feb. 11 and said they would pay the $1.30-per-prescription fee themselves.
But most of those same pharmacies now say that unless the tax is repealed,
they will be forced to pass it along indirectly to customers, in the form
of higher prices, higher health insurance premiums, reduced services, or some
combination of all three.
"We are not in a position to absorb this tax," said Todd
Andrews, spokesman for CVS Corp., which had estimated its prescription tax bill at $24 million this
year. Andrews said CVS has gone back to the major health plans in a bid to shift
the tax burden to them. If that strategy works, the health plans would
presumably shift the burden onto their members in the form of higher premiums.
Walgreens, whose abrupt and unexplained decision 12 days ago
to stop passing the tax on to customers forced the rest of the industry to follow suit, says it
cannot afford to keep absorbing $1 million a month indefinitely. Walgreens
spokesman Michael Polzin said the company wants the tax repealed, but if
that effort fails, the company would have to consider hiking prices and/or cutting
services, he said.
"Any tax on business is ultimately borne by the consumer,"
Polzin said.
Several smaller independent pharmacies have decided that
it's better to charge customers the prescription tax directly rather than indirectly. Inman
Pharmacy in Cambridge and Johnson Drug in Waltham are both continuing to
pass the tax along to their customers, despite the fact their policies put them at
a competitive disadvantage.
"I'd rather be straight and upfront about it," said Michael
Reppucci, the owner of Inman Pharmacy. "I have found most of my patients to be extremely
understanding about it."
Steve Bernardi at Johnson Drug rejects Massachusetts
Attorney General Thomas F. Reilly's suggestion that pharmacies may be violating their contracts
with health plans by charging customers with prescription insurance coverage
the tax. "I maintain that it's not my tax to pay," he said. "I'm going to
go down fighting on this."
Other independent pharmacies say they cannot afford to pass
the tax along to their customers unless the CVS or Walgreens down the street does the same
thing. As a result, they are looking for ways to offset the cost of the tax with
spending cuts, price increases, or end-runs around the tax altogether.
Mark A. Dumouchel, the president of Eaton Apothecary, which
operates 12 pharmacies in Massachusetts, said he is exploring ways to pare expenses to
offset the estimated $600,000 annual cost of the tax.
One option he is considering is opening a facility in New
Hampshire to handle those prescriptions that get refilled on a preset timetable. By locating in New
Hampshire, Eaton could avoid the Massachusetts prescription tax on a large
chunk of its business.
Other cost-saving options under consideration are cutting
the number of hours pharmacies are open and charging for deliveries. Dumouchel said overtime has
already been eliminated.
"Everybody's looking at the same things. You have to,"
Dumouchel said.
Charles Burnett, who oversees pharmacy operations for Costco
Wholesale Club, said the tax means his six pharmacies in Massachusetts will actually lose
money on some prescriptions they fill. He said Costco plans to study its options
carefully but unless the tax gets repealed, he said, the retailer would
probably have to increase prescription prices across the board.
"Why be in business if you're going to lose money?" he said.
Other pharmacies are far more likely to confine their price
increases to customers with no insurance coverage, who account for about 10 percent of
pharmacy customers and already tend to pay a significant premium for prescription drugs.
Reilly's probe is focusing on whether a pharmacy can legally
charge a customer who has prescription insurance coverage more than their copayment. While
that question is still undecided, no one disputes that a pharmacy can charge a
non-covered customer whatever it wants.
The major chains so far are treating noncovered customers
the same as customers with coverage. But several pharmacists said they expect smaller
pharmacies to significantly hike the prices they charge non-covered customers
to offset the cost of the prescription tax.
Elliot Strasnick of Village Pharmacy in Marblehead said he
will probably be forced to boost the prices he charges noncovered customers by 10 to 15
percent.
That's no surprise to Ruth Spinale, a North Attleboro senior
without prescription insurance coverage. As soon as the major chains announced they
would absorb the tax, Spinale predicted customers such as herself would be the
ones to absorb the tax. She said the notion, popular on Beacon Hill, that
pharmacies should absorb the tax and not pass it along to consumers in any
way is a "con job of the nth degree."
Refund policies
The three major pharmacy chains - CVS, Walgreens, and Brooks
- have all said they would automatically issue refunds by mail to customers who paid the
prescription tax in January and early February.
Stop & Shop is not issuing automatic refunds, instead asking
customers to contact the pharmacy where they filled their prescriptions. A Stop & Shop
spokeswoman said customers should bring receipts if they have them, but
added that refunds can be issued even without a receipt.
The smaller pharmacies by and large are not issuing refunds.
Steven Grossman, the owner of J.E. Pierce Apothecary in Brookline, suggested
customers wanting refunds ask the state for their money back.
