U.S. Cities Looking To Shed Retired Employees’ Healthcare Costs

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DETROIT, (UPI) —  Financially hurting cities are watching Detroit to see if the bankrupt city’s proposal to shed retiree healthcare benefits is feasible, The New York Times said.

Detroit officials, looking to pare billions of dollars in municipal government overhead, are proposing to move retirees too young to qualify for Medicare into health insurance exchanges created under the Affordable Care Act, the Times reported Sunday.

Chicago, Stockton, Calif., and Sheboygan County in Wisconsin are among the local governments planning or at least thinking about a similar move and the nascent trend has some retirees worried, the Times said.

In Chicago, a plan floated in May would cut some of the city’s 11,800 retirees and their families not eligible for Medicare out of city coverage by 2017. Some of those retirees may obtain insurance through new employers or through their spouses’ workplaces, but others will likely head to the insurance exchanges.

“With the implementation of the Affordable Care Act, our retirees will have more options to meet their healthcare needs,” said Sarah Hamilton, a spokeswoman for Mayor Rahm Emanuel. “We will ensure that they have all the information needed to navigate the options available going forward, while saving vital taxpayer dollars.”

“There’s fear and panic about what this means,” said Michael Underwood, a 62-year-old retired Chicago police officer with diabetes and Parkinson’s disease who is part of a group suing Chicago over its plan to phase out many retirees from city coverage in the next few years. “I was promised healthcare for myself and my wife for life.”

A Pew Charitable Trusts study this year determined 61 major U.S. cities are saddled with $126 billion in retiree health costs, with 94 percent of it unfunded, the Times said. The new health insurance exchanges created under ACA, which are meant to help uninsured people afford coverage, are a potential new option for local governments trying cope with the problem, the Times said.

“The Affordable Care Act does change the possibilities here dramatically,” said Neil Bomberg of the National League of Cities. “It offers a very high-quality, potentially very affordable way to get people into healthcare without the burden falling back onto the city and town.”

Should a significant number of local and state governments take that path, however, Timothy S. Jost, a law professor at Washington and Lee University who closely follows the law, said, “that’s going to be a huge cost for the United States government, and it’s mandatory spending.”

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