Dover Post: Katz bill would tax drugstores that opt out of Medicaid program

Dover Post
Friday, June 12, 2009

Drug stores that choose not to take part in the state's Medicaid program would pay higher taxes to help cover the cost of prescriptions and other medical aid for Medicaid patients under a bill introduced Thursday in the Senate.

Sen. Michael Katz, D-Centerville, said he came up with idea of adding on a special 2 percent gross receipts tax on drug stores that opt out of the federal-state low-income health insurance program after Walgreens announced last week that it would drop out of the program rather than accept a 2 percent reduction in state prescription payments for Medicaid clients.

State officials were seeking the reduction to help cover an estimated $800 million budget shortfall in the fiscal year that begins July 1. Walgreens was the only pharmacy chain in Delaware that rejected the state's request to trim payments to deal with the budget crisis.

Katz said he was outraged because of the influence Walgreens wields in the local marketplace. Walgreens operates Happy Harry's drugstores and has a commanding presence throughout Delaware.

"Walgreens has about 50-plus percent market penetration in private pharmaceutical business in Delaware and they make a lot of money from private insurance clients," Katz said. "If they're going to skim the cream off the top they have the responsibility to help those in need - the adults and children who use Medicaid - and do their fair share in caring for that population."

About 157,000 Delawareans - roughly one in five citizens - are enrolled in Medicaid. Last year the state paid Walgreens about $18 million for Medicaid prescriptions.

Rep. Helene Keeley, D-Wilmington West, is joining forces with Katz to get the bill passed. She said she likes the idea that the tax would be used to help Medicaid patients get by.

"I have a lot of Medicaid recipients who live in my district," Keeley said. "These folks need the assistance. These are folks who are struggling to make their co-pays and if we can do anything for them, we should."

Katz said he thinks the bill will enjoy broad support.

"Health care is a basic right," Katz said. "Many of my colleagues very concerned about the health care needs of all citizens especially those who are less fortunate and have lost jobs, who have children and are heavily dependent on the Medicaid system."