Bad Medicine For Medicare Retirees

Mass Retirees Opposes Voucher-Like Scheme

SEPTEMBER 2019: For more than a decade, public retirees have found their health insurance benefits under near constant siege by those looking to cut costs and reduce government spending. Through it all, Mass Retirees has often found itself engaged as the last line of defense against proposed cuts and changes that would negatively impact public retirees and survivors.

This time the Association has learned of a new proposal, still in its infancy, that could prove disastrous for retirees and their families. And this time, Association officials have set out to scuttle the proposal before it gains any steam.

The proposal, being pitched by Willis Towers Watson (WTW), would transfer Medicare enrolled retirees from the traditional group insurance plans, operated by the state and local governments, to what is known as the Medicare marketplace. Within the Medicare marketplace retirees would choose to enroll in the Medicare supplement plan of their choice and be reimbursed for all or a portion of the monthly premium by their former employer.

According to their website “Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world realize their path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets.”

The company, based in Arlington, VA and London, England posted more than $8 billion in revenue in 2018.  

In order to proceed, the concept would require a change in state law, which governs the rules for how municipal and state retiree health insurance operate. At the local level, municipalities that have adopted Chapter 32B can agree to contribute not less than 50% toward retiree health insurance premiums. Acceptance of Chapter 32B and its 50% contribution provision are irrevocable.

If passed into law, the WTW concept would allow cities and towns to contribute a flat dollar amount toward retiree health insurance premiums. In the past, the concept has been called a “voucher” or defined contribution (DC) plan. Both operate in the same manner, by granting retirees a fixed dollar contribution toward their health insurance. The retiree would then be allowed to “shop” within the Medicare marketplace operated by WTW and choose their own Medicare supplement plan.

While insurance plans fluctuate, at the present time health plans from BCBS, Harvard Pilgrim and Tufts are available on the Medicare marketplace. Proponents of the idea point to the wide variety of plans available at a lower cost per person as reason for the switch. They often cite freedom of choice and lower monthly costs as enticements for retirees.

Critics caution that the DC or “voucher” model often does not keep pace with medical inflation, leading to underfunded coverage for retirees. And retirees may find it confusing having to navigate a wide-selection of plans on their own, which could then result in retirees opting for seemingly lower cost options that carry high copayments and deductibles.

In recent months, Mass Retirees officials have twice met with representatives of WTW. On both occasions concerns were raised by the Association over the long-term impact on retirees.

Despite hearing those concerns, WTW continues to market their proposal to municipal officials and have gone as far as to examine what steps would be needed to change state law to allow for participation in the marketplace, as well as to alter the legal requirements for municipal insurance contributions.

“We are willing to hear from anyone with ideas on how we can continue to provide high quality and affordable health insurance to all retirees. After reviewing this proposal,

we believe it is a very bad idea that would put our members at risk,” explains Association Legislative Director Shawn Duhamel. “There is a reason those marketing these ideas keep changing what they call it. Voucher or defined contribution – they are the same bad policy that transfers liability from the employer onto the backs of retirees.

“This is also the same type of scheme that former House Speaker Paul Ryan and his right-wing allies tried to push onto Medicare. Thankfully they failed. It is a bad idea that puts retirees at risk and has no place in Massachusetts.”

At the present time, Mass Retirees is unaware of any formal proposals to alter state law or enact the Medicare marketplace proposal within Massachusetts. The Association is now working closely with the public employee unions to educate our members, as well as state and local officials, as to the pitfalls of the concept.

“As the saying goes, when something seems too good to be true, it often is,” added Duhamel.