Taveras Wants to Move City Retirees to Medicare
Wednesday, May 18, 2011
Providence Mayor Angel Taveras is hoping to chip away nearly 10 percent of the estimated structural deficit next year by moving some current retirees off of a city-funded health plan and onto Medicare.
The move would save an estimated $11.6 million a year—almost as much as the total that Taveras is seeking from the fire and police unions in concessions.
City officials say that retiree health care is one of the single biggest cost drivers in the structural budget deficit. In fact, the city faces a $1.5 billion unfunded retiree health care liability—not counting the unfunded liability for pension payments.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST$1.5 Billion unfunded liability for retiree health care
“Providence’s $1.5 billion unfunded retiree healthcare liability is one of the most significant challenges we must tackle to put Providence back on firm financial footing,” Taveras told GoLocalProv. “This legislation is an important first step in slowing astronomical increases in healthcare benefits costs that, if left unchecked, will make long term financial recovery impossible. This is a problem that will only worsen with time and we cannot afford to wait another day to take decisive action.”
The city is seeking the health care changes in the form of a new state law—which is among the top items on its legislative agenda, which the Mayor’s office released this week. Under the proposal, eligible retirees would be moved over to Medicare after age 65. The new law would allow Providence to do what the state already does with its retirees.
Short of that, the city is hoping to institute a 20 percent health insurance co-share for retirees. The new co-share would save Providence about $2.5 million a year.
As of this writing, legislation to achieve either option has yet to be introduced.
Retiree: ‘Another hit’
Several retirees contacted by GoLocalProv were unaware of the proposed change to their benefits. At least one of them said he thinks it’s a bad idea. “I don’t think that’s a smart idea. I don’t think that’s going to happen,” said retired deputy assistant fire chief William Manchester.
He said he was especially worried over the idea amid concerns that the federal government may be cutting Medicare benefits. “If we’re going to take a dump on Medicare that’s going to be another hit on top of that,” he said.
He expects that most retirees would oppose it. “I would think so because they would have to be stupid to want to go on Medicare because Blue Cross is a better benefit for us,” Manchester said.
The current head of the city firefighter union, Paul Doughty, told GoLocalProv that he thinks the city should follow the collective bargaining agreement that was in place when someone retired. Instead of seeking a state law to make the change mandatory, he said the city should have reached out to retirees directly, making the switch voluntary.
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