New Missouri Drug Benefit Plan Could Violate State Constitution

Some Missouri officials and legal experts are questioning whether a prescription drug benefit recently approved by the state Legislature could be unconstitutional because it might violate a "revenue-capping amendment," the Kansas City Star reports (Kansas City Star, 9/18). Under the approved benefit, which would repeal a $200 tax credit implemented to help individuals ages 65 and older purchase medications, seniors in two income categories would be covered. Individuals earning $12,000 or less and couples with incomes of $17,000 or less would compose the first group, and singles earning $17,000 or less and couples with incomes of $23,000 or less would compose the second group. Seniors in the lower income bracket would pay a $25 annual enrollment fee and a $250 deductible, while those in the higher income bracket would pay a $35 enrollment fee and a $500 deductible. Once seniors contributed the deductible, the state would pay 60% of their remaining drug costs (Kaiser Daily Health Policy Report, 9/14). Constitutional concerns over the new benefit involve the repeal of the tax credit, which last year cost the state $85 million. A 1996 amendment to the state's constitution prohibits the Legislature from raising more than $70 million in new revenues during a fiscal year without a statewide vote, and during a special legislative session last week, some Republican lawmakers expressed concern that repealing the tax credit could bring in new revenues above that limit. But Lt. Gov. Joe Maxwell (D), who led a task force that developed a "blueprint" for the benefit, maintains that the tax credit repeal would not necessarily generate new state revenue. He said, "I believe the Legislature did not raise taxes here (but) that they simply took a prescription drug program and retargeted it on seniors in a different way." James Owen, a St. Louis attorney, added that even if the tax credit repeal generates new revenue, it "likely would not meet the constitutional threshold." Owens said that in fiscal year 2000, most prescription drug tax credits were given as refunds to taxpayers, meaning that the money was already counted as state revenue and would not be counted as new revenue if the credit is repealed (Kansas City Star, 9/18).

Plan Is Short Term Solution, Editorial Says
The cost of the new drug benefit could be as high or even higher than the cost of the tax credit, a situation that "seems odd because cost was one of the main reasons why legislators wanted to do away with the old program," a Kansas City Star editorial says. Though the $200 tax credit cost $85 million last year, legislative staff members say the new benefit could cost around $100 million in the first year. In contrast, consultants say the benefit should cost around $47 million. The "huge difference is troubling because it means lawmakers don't really know what to expect," the editorial says. However, state lawmakers have implemented several provisions to help the government cut costs, such as an oversight commission that will be able to adjust enrollment fees and deductibles. Depending on what the state and commission decide, some seniors who depend on the program may not be able to participate year-to-year because of changing qualifications. The editorial concludes by advising Gov. Bob Holden (D) to sign the legislation, even if the new benefit will not be a "permanent solution," but cautions that "the help for many could be short-lived if Missouri's budget woes worsen" (Kansas City Star, 9/17).