Local governments take budget knife to retiree health plans

[Live and Learn]

Source: Reuters

(Reuters) - As cash-strapped U.S. cities and states struggle to address gaping budget holes, a long-honored benefit for public-sector workers has come into the cross-hairs of budget cutters: retiree health insurance.

A growing number of states and cities are eliminating or reducing health coverage for retirees, a benefit that has long fallen by the wayside for most private-sector workers.

But the coverage, which has meant that most retired public workers have all their medical bills fully paid, is expensive and hugely underfunded. And because health coverage does not typically have the strong legal protections that hamstring changes to public pension benefits, it is easier for governments to scale back.

The trend could leave millions of public workers with thousands of dollars in unanticipated healthcare costs.



Read more: http://health.yahoo.net/news/s/nm/local-governments-take-budget-knife-to-retiree-health-plans

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I can't help but wonder what will become of these retirees since many are not eligible to Medicare either because they didn't pay in or are not old enough.

[sakabatou]

1. We need single payer

[Live and Learn]

2. Yes, we do. nt

[msongs]

3. we need democrats willing to lead on this issue. is there one? nt

[Live and Learn]

4. What we need, is the people demanding it.

No Democrat could get Republican support as it is now. Sadly, until something is done about the media takeover in this country, I doubt we can get the support needed.

[Live and Learn]

5. On the plus side

I bet we just got a whole lot of government employees supporting it.

[valerief]

13. Amen. nt

[silvershadow]

6. bump

[Freddie]

7. I think Medicare eligibility is not contingent on "paying in to it"

But SS is, as many state and local government employees do not contribute to SS and are totally dependent on their state/local pension.

[Live and Learn]

8. Eligibility to Medicare is contingent on SS eligibility or paying for government employees

to Medicare. Many government employees are not allowed to do either. These retirees would be forced to pay for medical insurance from their retirement income.

How this was allowed to happen without a guarantee of health care is beyond me. The SS exemption saved the government money and was allowed because of the guarantee that government employees would be payed their pensions even if the pension associations investing their monies couldn't pay and tax payers had to (of course, now some want to break that guarantee too). But the health care was never guaranteed, so how did they get exemptions from that.

This was not the retirees or employees doing but the governments themselves because it saved them money.

[kelly1mm]

9. They will all be dumped on the exchanges/medicaid (if their income is low enough) nt.

[Live and Learn]

11. They won't be since they will get their contracted pension (at least for the time being)

but the point is that they included their contracted (but not apparently protected) medical plans as part of their decision to retire. They will lose a great deal of their income if they have to purchase a plan (and if Romney does get elected and on the off chance that he does repeal Obamacare may not even qualify for a plan).

These retirees worked for the government (for the most part in lower incomes than those they could have made elsewhere) because they had faith that the government would uphold their part of the contracts. Who can you trust if even the government breaks its promise to you?

[kelly1mm]

14. Some pensions (early retirement) are less than 125% of the poverty level. My wife's

pension at age 55 with 21 years as a school teacher would be $11,770 per year. If that was all her income she would qualify for medicaid as there is no asset cap under ACA.

[Kolesar]

16. what is the downside to buying "insurance" on a state or federal exchange?

I think it is a great advantage to not be denied health insurance.

[kelly1mm]

18. It's the "buying" part. It was free/very low cost for retirees. For example, my school teacher

wife can get health insurance for life if she were to have 85 credits (credits are age+years of service) and she would pay 5% of the cost.

[Kolesar]

19. I agree. She got screwed out of benefits she was promised.

She would be able to get a federal subsidy if she was within ~400% of the "federal poverty limit". That means people with a pension of ~$30,000 will get a subsidy in 2014. It's a tax credit.

http://www.healthcare.gov

[Kolesar]

20. I agree. She got screwed out of benefits she was promised.

She would be able to get a partial federal subsidy if she was within ~400% of the "federal poverty limit". That means people with a pension of ~$30,000 will get a subsidy in 2014. It's a tax credit.

I lost track of the details: I thought it was here: http://www.healthcare.gov
http://www.healthcare.gov/law/features/choices/exchanges/index.html

[proud2BlibKansan]

10. Tragic

Some of these local governments make their employees retire young. Pretty hard to start a new career.

[valerief]

12. I'm sure the state congresses will keep theirs for life, as does the U.S. Congress. nt

[Dustlawyer]

15. Years ago one of the attractive things they pushed to make up for lower wages were the pensions

and insurance. So they gave up more money and lost the biggest, most attractive part of the jobs they took. It is just wrong! My Dad worked for Bethlehem Steel and when they went under the top executives got golden parachutes and looted the company. The retired workers lost most of their pensions since they looted the pension fund. My Dad passed and now my Mom gets so little money from it, it is a joke. It is a big game of bait and switch played out over 35-40 years.

[Live and Learn]

17. Exactly. So sorry to hear that your parents

had to suffer through just such a nightmare.

[yardwork]

21. So what are we going to do about this?

At what point do people stand up and demand some rights?

[hack89]

22. There has to be a state solution

small cities and towns don't have the skill and expertise to manage these pension systems. Toss in politicians that will promise anything to ensure re-election knowing that they will be out of office when the bill comes due and you get the mess we find ourselves in.


Public workers need a single state system that is not dependent on local property taxes and can be managed for the long term by professional money managers.

[ieoeja]

23. We need a federal solution.

Possibly Reagan's single worst legacy was moving so much to the state/local level. That forces states to compete against each other which shrinks the tax base.

Indiana gets United Airlines to move maintenance to Indianapolis by offering them a tax exemption. Indiana tax base increases by the new jobs. Illinois tax base decreases by the lost jobs -plus- the loss of United Airlines Maintenance.

Illinois gets Boeing to move corporate headquarters to Chicago by offering them a tax exemption. Illinois tax base increases by the new jobs. Washington tax base decreases by the lost jobs -plus- the loss of Boeing.

In both cases, the loser loses more than the winner gains. There are hundreds, possibly thousands, of such examples.

Pre-Reagan state taxes were so low that there was little competition between them in this manner. Now that the states are responsible for so much more of their own funding, it puts them into a competitive state. And we get the above mess.

[hack89]

24. Hard to see federal pensions for state employees

Would that mean state tax money going to the federal government?