The Patriot Ledger
Tuesday, July 29, 2002
Editorial
Last chance to balance budget
Acting Gov. Jane Swift did what the Legislature could not
and sent lawmakers a balanced budget yesterday.
The Legislature was left with two days in which to swallow
hard and accept Swift's $355 million in vetoes or throw the budget out of whack again. Smart money is on legislators doing
the political thing rather than the right thing.
There's a lot of pain to go around in this budget, with cuts
affecting programs big and small, including local aid to cities and towns, which would be cut by $31 million. Amazingly, Swift
was able to keep most education spending intact, including an overall increase of $45 million
in Chapter 70, or local aid to school districts. In order to do that, Swift cut kindergarten
expansion by $28 million and reimbursements for charter school students by $28 million.
In order to preserve higher education programs, Swift cuts
current and retroactive raises for a saving of $30 million. This action has generated a lot of heat, because no one likes
to see collective bargaining agreements violated. But a pay freeze is a small price to pay in these
circumstances, and legislators left Swift few choices.
At every turn they protected constituencies which are their
natural allies. And they salted the budget with earmarks - that is, pet projects. Swift has blue-penciled $40 million of those
for elimination.
The fiscal state of the commonwealth is unhealthy, to say
the least. Swift stated in her veto message that the decline in state revenue over the last year has been historic - amounting
to 10 percent of the state budget. Yet, by raising taxes by $1.4 billion, a move she opposed,
and using $550 million from the stabilization fund, next year's budget would still increase
by a little less than 1 percent. That's according to Swift's plan.
If the Legislature starts overriding Swift vetoes, the
budget will be off balance. She warned yesterday that the Legislature would then have to come back later to make more
cuts.
It would suit lawmakers' goals to override vetoes, declare
victory, and then take a break to vacation and pretend to be campaigning for re-election. Few have any real opposition.
That would be a distinct disservice.
Real people have been hurt by the economic downturn and its
effect on the budget, including 50,000 people who won't have access to health insurance run by the state. Cuts to the court
system also will hurt ordinary citizens.
That said, the cuts in most areas have not been Draconian -
yet - and the Legislature never entertained revenue-raising measures, such as cutting Lottery payouts, that could have
helped.
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The Boston Herald
Wednesday, July 31, 2002
Stockholders may get last laugh in budget snafu
by Elisabeth J. Beardsley
Beleaguered stockholders could be in line for an accidental
tax break, after lawmakers apparently bungled a budget provision intended as a Republican joke on tax-hiking liberals.
It all started innocently enough in May, when House Speaker
Thomas M. Finneran gave a consolation prize to Minority Leader Francis L.
Marini.
Marini, incensed over a $1.14 billion tax-hike package
Finneran had recently shepherded through the House, secured an outside budget section allowing people, by which he meant
liberals, to put their money where their mouths were and voluntarily pay a higher income tax
rate.
The rider also provided that capital gains - primarily
stocks, but also profits from the sale of any asset - would be taxed at the same flat rate as income. For the purposes of the
voluntary tax hike, that meant a 5.85 percent tax rate.
Here's the problem - the giant tax hike lawmakers just
placed on the books last week jacked up the tax on short-term capital gains to 12 percent, more than double what the budget
provision allows.
Acting Gov. Jane M. Swift noticed the contradiction while
combing through the budget with her veto pen - but looked the other way.
Swift could have submitted corrective language, but opted to
let it slide in hopes of grabbing a small tax cut in the year of the biggest tax hike in state history, said spokesman James
Borghesani.
"We just figure that if anybody can possibly have capital
gains in this economy, it's a little ray of sunshine," Borghesani said.
But Senate leaders have caught on to their mistake and are
drafting a "technical correction" bill to reinstate the 12 percent tax rate, Borghesani said.
Senate Ways and Means Chairman Mark Montigny, who led the
push for the higher capital gains tax, could not be reached for comment.
House lawmakers don't appear in a rush to fix the error,
given that the full House had voted for the lower tax rate.
"It was a mistake - but a fortuitous one," Marini said.
Administration officials said the loophole probably wouldn't
benefit the "average Joe" who holds few, if any, capital gains. But it could prove a boon to wealthy stockholders - if they're
willing to pay higher income taxes.
Any corrective bill would have to be whipped through the
Legislature by midnight tonight, when formal legislative sessions end. After that, any lawmaker can kill any bill with a
single objection.
The deadline pressure was evident at the State House
yesterday, where lawmakers rushed frantically to push bills past the finish line....
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The Boston Herald
Wednesday, July 31, 2002
Mass. heads for Rx crisis:
Major druggists to bolt Medicaid
by Jennifer Heldt Powell
A last-minute appeal to Bay State druggists not to abandon
nearly 1 million Medicaid recipients largely fell on deaf ears yesterday.
The plea came after Brooks Pharmacy and Walgreen Co. said
they would join CVS in cutting off Medicaid patients because of reduced reimbursement rates. The three run 555 of
the state's 1,014 drug stores and fill 60 percent of all state Medicaid
prescriptions.
Despite the appeal, CVS Corp., which fills a third of
Medicaid prescriptions, said it would drop them.
"We have tried to negotiate for one month with state
officials concerning the cut to the Medicaid pharmacy reimbursement. Unfortunately these negotiations have had no
effect," said Todd Andrews, CVS spokesman. "The cuts approved by the Legislature and the
governor create a program that is below our cost of operation and as such we can not
participate."
State officials pleaded publicly with drug store operators
to give them 60 days to remedy the situation before they drop Medicaid patients. There are about 900,000 Medicaid recipients
in the state's MassHealth program, including many of the poorest residents and foster
children.
"We're asking these three pharmacy chains and any other
pharmacies that have indicated they are thinking about leaving the program to act as responsible corporate citizens and
continue to serve the individuals who are relying on them," said Robert P. Gittens, secretary
of the Division of Health and Human Services.
In return, he pledged to have a public hearing on the impact
of the rate cut within 60 days, even though the budget allows 120 days. But any rate change would have to be approved by
the Legislature, which wraps up its formal session for the year tonight.
Andrews at CVS said the chain will set a timetable in the
next few days to leave the program.
CVS will also be evaluating its stores to determine whether
any will close or reduce hours, Andrews said.
Walgreens and Brooks couldn't be reached last night for
reaction to the state's request, but spokesmen for both companies had said earlier yesterday they will join CVS in
cutting off Medicaid patients.
"The new rate will reduce our reimbursements to below our
costs and would put Massachusetts dead last in terms of the states in which we serve Medicaid," said Michael
Polzin, a spokesman for Walgreen Co.
The Illinois-based chain has 90 Bay State stores.
"The state's action creates an unnecessary hardship for
Medicaid recipients because they'll be denied access for prescription drugs. We apologize to the patients, but no
business can operate on a loss," Polzin said.
Under the budget, pharmacies are repaid for the wholesale
cost of Medicaid prescriptions, minus 2 percent. Previously they got the whole sale cost plus 10 percent.
Drug stores still get a $3 dispensing fee for each prescription they fill, but they say the cost of
dispensing the medicine is $9 to $10.
Brooks is putting in place procedures for stores, "so we can
in this terrible situation handle things in the best fashion possible," said Dan Haron, vice president, earlier yesterday.
The Rhode Island based chain has 165 Bay State stores.
Several smaller independent pharmacies said they will have
to withdraw from Medicaid. For those that serve large numbers of recipients, that will mean shutting down altogether.
"It's going to have devastating consequences," said Jay
Leary, owner of Southerland Pharmacy in Brighton, which has been doing business for 32 years. "I think the Legislature is
being very shortsighted."
About 95 percent of his business is with Medicaid patients,
many of them Russian immigrants, he said.
Lawmakers need more information before making any changes,
said Senate Ways and Means Chairman Mark Montigny (D-New Bedford). He added that he hopes druggists will
heed Gitten's plea.
"I think there is no defense for denying that request," he
said. "We are in a fiscal crisis and there are cuts in this budget that no one feels good about."
He criticized the chains for pulling out of the program.
"If there is a feeling that we have been irresponsible, then
tell us in a public hearing," Montigny said. "To simply threaten to throw out poor people from your stores is a gross
injustice."
Health care activists said the pharmacies should use their
power to put pressure on the drug companies to cut costs instead of abandoning the state's poor.
Gittens said the state will consider the effect of the rate
cut, but that something must be done to help curb Medicaid's rising costs.
"What the Legislature did we recognize has an impact on the
profit margins that these pharmacies have been accustomed to, but the Legislature, along with all of us, is looking for
ways to get under control the growing health care costs and that includes pharmaceuticals,"
he said.
Last year, the state spent nearly $1 billion just on
prescription drugs, he said. "The main thing we're saying today is to meet us half way, be good corporate citizens."
While the state makes plans for a public hearing, officials
will also be looking at alternatives, Gittens said.
"Our primary concern is ensuring that folks who rely on
MassHealth continue to have access to the prescription medications that they need," he said.
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The Telegram & Gazette
Wednesday, July 31, 2002
Swift vetoes may stay
By Shaun Sutner
[...]
State Sen. Richard T. Moore, D-Uxbridge, chairman of the
Legislature's Health Care Committee, was critical of the pharmacy chains' action, though he cautioned that none had
actually withdrawn yet.
Mr. Moore noted that budget language accompanying the
Medicaid cut requires a public hearing. "The hearing will be an opportunity for the state to assess the impact of this," he
said.
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The Boston Globe
Wednesday, July 31, 2002
State appeals for Medicaid prescriptions
CVS says no; other outlets weigh pullout
By Bruce Mohl
Globe Staff
Fearing a meltdown in the state's Medicaid program, a top
aide to Acting Governor Jane Swift yesterday appealed to pharmacies to continue filling prescriptions for at least 60
days, but CVS Corp. said the last-minute pitch by Massachusetts officials was asking too much.
CVS, Brooks Pharmacy, Walgreens, and many independent
operators say a budget measure that Swift signed into law on Monday contains prescription reimbursement rates that
would cause them to lose money on every prescription they fill for the state's poor and
disabled.
"We have tried to negotiate for one month with state
officials concerning cuts to the Medicaid plan reimbursement rate. Unfortunately, these negotiations have had no effect,"
said a CVS spokesman last night. "We are proceeding with our plans to withdraw from the
Massachusetts Medicaid program."
Brooks and Walgreens earlier yesterday said they planned to
join CVS in withdrawing from the Medicaid program, as did many independent pharmacies. Officials at those companies
either could not be reached for comment last night or asked for more time to consider the
Swift administration's proposal.
CVS's quick rejection came shortly after Robert
Gittens, Swift's secretary of health and human services, called on pharmacies to remain in the Medicaid program for 60 days while
the administration holds hearings on whether prescription reimbursement levels contained in
the just-passed state budget should be increased.
"It would be unconscionable for them to leave people
stranded," Gittens said. "We're asking them to be good corporate citizens."
Yet Swift helped create the predicament she now finds
herself in. Gittens said Swift signed the pharmacy-reimbursement cut into law Monday because the $60
million it saves was needed to stave off cuts in other state human service programs.
But now the administration plans to hold hearings on whether
the reimbursement level should be increased to prevent a mass exodus of pharmacies from the Medicaid program. Any
increase in the rate presumably would have to be offset by the type of
budget cuts Swift wanted to avoid in the first place.
Pharmacies say two proposals in the state budget affect them
negatively. One cuts the state's reimbursement rate on Medicaid prescriptions from 10 percent above the so-called
wholesale acquisition cost to 2 percent below, saving the state an estimated $60 million a
year. The other would impose a user fee or tax on all non-Medicaid prescriptions, generating
$36 million, a sum the state hopes will be matched by the federal government.
With CVS, Brooks, and Walgreens, over half of the state's
pharmacies are now on record saying they plan to withdraw from the Medicaid program. Many independent operators are
expected to withdraw as well.
"I think you'll see the majority of independents withdraw,"
said Steven Grossman, the owner of J.E. Pierce Apothecary in Brookline. "I don't see how anyone can stay in business losing
money on every transaction."
The mass exodus could put the state's 900,000 Medicaid
recipients in the position of having to search high and low for a pharmacy that would fill their prescriptions.
Kurt Kuss and Barbara Ceconi, a Brookline couple on
Medicaid, are panicking. Both are blind and diabetic, and Ceconi is undergoing dialysis. They need to fill a lot of
prescriptions. Their local pharmacist, Grossman at J.E. Pierce Apothecary, has told them he intends to
withdraw from the Medicaid program and the only other pharmacies nearby are owned
by CVS, Brooks, and Walgreens.
"There isn't going to be any place around here to get our
prescriptions filled," Kuss said. "Life is tough enough for us. It's going to be another full-time job just filling a
prescription."
Fearing a public backlash if Kuss and other Medicaid
recipients are effectively denied prescription coverage, Gittens late yesterday issued his appeal to the pharmacy chains
to hold off on withdrawing from the program. He said Linda Ruthardt, the commissioner of
health care finance and policy, would complete the hearings on the reimbursement rates
within 60 days. Gittens said the new lower rates took effect Monday.
Gittens declined to say whether the goal of the hearings was
to increase the reimbursement rates, as pharmacies have been demanding. "We're going in with an open mind," he said.
Gittens said the pharmacy budget language is unusual, in
that it sets the Medicaid reimbursement rate and then directs the administration to hold hearings on the adequacy of
that rate.
CVS spokesman Todd Andrews said the chain, which operates
299 pharmacies in Massachusetts, could return to the Medicaid program if Ruthardt increases the
reimbursement rate down the road.
Dan Haron, vice president of pharmacy at Brooks Pharmacy,
which operates 165 pharmacies in Massachusetts, said earlier yesterday that filling prescriptions at a loss is very
difficult for a company where 70 percent of its sales are pharmacy-related. Even though
Medicaid prescriptions represent only 17 percent of the chain's sales in Massachusetts, filling
those prescriptions at a loss could destabilize the entire company, he said.
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The Boston Herald
Wednesday, July 31, 2002
Anxiety grows over drug change
by Jennifer Heldt Powell
Doris Marshall has helped raise hundreds of medically needy
children, but the state could lose her parenting skills.
Groups representing hundreds of pharmacies have said they
will no longer serve Medicaid recipients because of reimbursement cuts, and that could leave Marshall with no place
to go. The children Marshall cares for are all covered by Medicaid.
"I don't have any idea what I'm going to do," said Marshall,
who has three foster children in her home, along with three others. "I may have to ask them to take the kids out because I
can't be responsible for them."
Foster parents get only $15 a day to care for the children,
which is not enough to cover their medical needs, she said. And the children in her care can't go without their medicine.
"We already don't have enough foster parents, and now it's
going to get worse," she said.
Hundreds of pharmacies, including those owned by the major
chains, expect to cut off Medicaid recipients because of cuts in drug reimbursment rates under the budget signed this
week by acting Gov. Jane Swift. Pharmacy owners say the state will pay
them less than their cost for drugs.
Several independent pharmacies who serve large numbers of
Medicaid patients said yesterday that they may be driven out of business.
The closures could affect hundreds of thousands of the
state's poorest residents, seniors, people with disabilities and children in the foster care system.
Elizabeth Swanton, of Quincy, fears that she won't be able
to get medicines for her adopted son, who is covered by Medicaid.
"I will have to go to the hospital or talk to his doctors,"
she said. "I would hope there will be some system in place so the children will get the medicine they need."
She said she fears that foster parents with children will
have a hard time getting medicine if they can't fill prescriptions at neighborhood drugstores.
"I am concerned that we will have children who are not
getting medicine," said Swanton, who has raised many foster children. "A lot of (foster parents) will not have the ability
to get to a pharmacy that is far away."
Swanton gets her prescriptions filled at Tremont Drugs in
Boston, which delivers. But the South End drugstore, open since 1903, may have to close, said owner Gary Einsidler. He
said 70 percent of his business comes from Medicaid recipients.
"I don't know what I'm going to do," he said. "It's a shame.
I don't think (lawmakers) understood what they were doing."
Einsidler said he was inundated yesterday with calls from
customers concerned that they won't be able to get their medicine anymore.
"I tell them I am still filling their prescriptions now, but
I don't know what will happen in the future," he said.
The new Medicaid rates took effect Monday.
Sidney Lanier, 58, needs eight medicines to treat ailments
including arthritis, blood pressure and blood clots. He now goes to a pharmacy near his home, but it may close.
"It's not a good thing. I don't know what the Legislature
was thinking about when this was brought up," said Sidney Lanier, who sometimes can't walk and is half blind.
"I'd have to rely on the pharmacies at hospitals, and I
don't know if they'll stay open," he said.
Jesus Bonilla, 41, who has spent the last six years in a
wheelchair after suffering a stroke, fears he will end up in a hospital if he can't get the 10 different drugs he needs.
"I can't walk," the South End resident said. "I'm going to
have to fight it.... I'll have to put my lawyer to work."
Doug Levy contributed to this report.
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