ASSOCIATION DEFENDS RETIREE HEALTHCARE BENEFITS

ASSOCIATION DEFENDS RETIREE HEALTHCARE BENEFITS
Bill Rehrey Makes Retiree Presentation To Commission

Presents Report To Special Commission

JUNE 1, 2012: The Special Commission on Retiree Healthcare held its second meeting on Thursday, May 31. Similar to its inaugural meeting in April, the Commission used this meeting to continue its fact-finding inquiry into both state and local retiree healthcare benefits.

Association Executive VP Bill Rehrey presented a 34-page report to the Commission, in which we defend our members’ benefits and explain the factual demographics of retiree insurance costs vs. retirement income. Shawn Duhamel, our Association’s Legislative Liaison, represents the Association on the Commission.

After giving a brief overview of our forty-four year history and the major retirement milestones in which we have played a key role, Rehrey walked the 11-member Commission through detailed information covering the healthcare costs borne by retirees and survivors. Included were the results of last year’s local insurance survey, in which many members participated.

Rehrey also provided profiles of the insurance costs paid by retirees and survivors from four different municipalities. Both Framingham and Clinton have opted to keep their insurance plans under local control by initiating “plan design” changes through negotiations. However, Monson and Salem each decided joining the state’s Group Insurance Commission was the best option.

“We tried to show the Commission an accurate view of how much these healthcare plans are already costing our local retirees and survivors. Statewide the average municipal pension is just $21,900. In some small towns, like Monson the average pension is far lower than the state average,” says Rehrey. “It’s easy to focus on the projected healthcare liabilities over the next 30 years and have the natural impact to make benefit cuts. We have to consider what reaction these changes might have on people at the low end of the income scale.”

Monson’s yearly average is just $11,159 or $929 per month. As a 50/50 community, Monson’s retirees pay an average monthly insurance premium of $300.18 for the non Medicare Tufts Navigator (41% of average pension). Medicare retirees pay $186 for the GIC’s OME plan, plus an additional $99.90 per month for Medicare Part for a total monthly insurance premium cost of $370.90 (39.8% of average pension).

The monthly average cost also includes the average out-of-pocket cost of $85 paid by GIC insured retirees. Our 2011 survey of local retirees indicated the average cost of copayments and deductibles to be roughly $1,200 for municipal retirees.

Together with AFSCME Legislative Director Nancy McGovern, Rehrey also implored the Commission to consider the impact of recent pension and municipal healthcare reforms on future liabilities. Rehrey also focused on current insurance payment reform legislation, initiatives by Blue Cross Blue Shield and federal Medicare reform plans all aimed at lowering healthcare costs.

For her part, McGovern also related her personal experiences in working at the grassroots level assisting local PECs in their insurance negotiations. She also pointed out that less than ¼ of the state’s 600 political subdivisions have entered into agreements under the insurance reform law or section 19, coalition bargaining.

“I did get the sense that my fellow commissioners listened very carefully to what Nancy and Bill had to say. You’d be hard-pressed not to take seriously the numbers that Bill put forth in his report,” said Duhamel. “Arbitrarily cutting billions in insurance liabilities without fixing the root problems with our healthcare system is simply transferring that debt onto the backs of public retirees. This simply cannot be an accounting game where the government pays less and retirees pay more.

“Otherwise, as Senator Hart pointed out during the meeting, real people living on very modest incomes are going to be hurt. I think that most members of the Commission understand this point.”

Senator Jack Hart (D-South Boston) represents the Senate President on the Commission. He is joined by Senator Michael Knapik (R-Westfield), who represents the Senate Minority Leader.  From the House, Rep. John Scibak (D-S. Hadley) represents the Speaker and Jay Barrows (R-Mansfield) the House Minority Leader.

Retired Dracut firefighter Andrew Powell represents the AFL-CIO and is a close ally of our Association.

Other members include Henry Dormitzer (Chairman), Assistant Secretary of Administration and Finance Greg Mennis, GIC Executive Director Dolores Mitchell, and Shrewsbury Town Manager Dan Morgado.

In collaboration with the AFL-CIO, our Association has retained Boston Benefit Partners to assist with research and analysis. We are also working closely with the National Coalition of Public Employee Retirement Systems (NCPERS) and the National Healthcare Roundtable, who are providing research and technical assistance.

The Commission’s next meeting will take place July 18, at which time potential reforms will begin to be discussed. By law, the Commission is scheduled to file a report of recommendations with the Legislature by November 30, 2012.

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