Should RI move public retirees to the Obamacare marketplace?

July 19th, 2013 at 5:29 pm by under Nesi's Notes, On the Main Site

Target12_OPEB_retiree_health_davisIt’s no secret that one of the biggest long-term challenges facing most Rhode Island municipalities is their huge, almost totally unfunded liabilities for retired workers’ health care.

As I reported back in 2011, the state’s municipalities have promised more than $3 billion in medical coverage to retired public-sector employees – but have set aside almost nothing to cover the costs. On paper, at least, the underfunding is actually worse for retiree health than it is for pension funds.

Detroit’s bankruptcy filing, however, suggests a new option for Rhode Island cities and towns – moving their retirees into the new HealthSource RI insurance marketplace being created under President Obama’s Affordable Care Act. Detroit thinks it will save millions of dollars a year if it does so with its roughly 19,000 retirees. Rahm Emanuel has already announced plans to move Chicago retirees to the exchange there.

“The big benefit to moving workers into the state marketplaces is that it shifts the burden of paying for health care from the city to the federal government,” The Washington Post’s Sarah Kliff notes. “That’s a benefit for the city, at least” – and likely for Rhode Island’s state government, as well.

“There are some drawbacks for states,” Kliff adds. “Some city workers might not qualify for subsidies in the new marketplace because their household income is too high. Others might not be able to find an affordable plan in their area, leaving them in a bit of a lurch until they turn 65 and qualify for Medicare.”

There could be other benefits to shifting public retirees into HealthSource RI.

Doing so would increase the pool of individuals covered by plans inside the exchange, spreading the insurers’ risks over a larger population. Some of those retirees might be relatively young, in the case of public-safety officers who finish work in their 40s. Additionally, centralizing management of health coverage could – in theory – provide for economies of scale and streamlining of benefits.

Retirees might not like the idea, however, and it’s possible unions could challenge the legality of such a move. Then again, if HealthSource RI proves to be a success there may be less reason for opposition.

“I think that there is real potential for public-sector government entities to slowly move pre-Medicare retirees to the public exchanges,” Stuart Wohl, a retiree health expert at The Segal Co., told Governing.com earlier this week. “The amount of time for planning would make it difficult for public employers to have everything ready in time. All the facts aren’t going to be out until open enrollment [on Oct. 1].”

• Related: Pensions was easy – RI’s bigger problem is health care costs (Nov. 28, 2011)

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8 Responses to “Should RI move public retirees to the Obamacare marketplace?”

  1. SteveD says:

    Hey, I have a novel Idea! Why not honor the contracts? There are too many problems with this, including out of state retirees. Just like everyone that moves to warmer climates, oh wait, public sector workers are slaves. They are not allowed to move! In Providence, where healthcare is paid as you use it. There is confusion on how much they really pay. Many young and even many older city workers, may only go to the doctors once a year. What does the city say? That worker’s health care cost $10,000 dollars. That is a lie. The city pays only for his checkup, and a $28 dollar a month Blue cross fee. So the above worker cost the city about $350 a year, with most cost going to Blue cross. Wake up people, the state and cities are lying to you about costs. You made the deal, many gave up raises, and other benefits for health care, only to be screwed in the end.

  2. Dick Varone says:

    Maybe we can get Nancy Pelossi in here to present the case for the administration of Obama-Chaffee about lying under oath charges which I am sure the attorneys general will bring in the federal-state courts. Wait. It’s only a joke, like April fools’.

  3. charles r says:

    If the state does not stop loosing population, most important the private sector middle class taxpayer,the cost of healthcare or the provider will not be the major concern for the pensioners. The main concern will be if they have a pension at all. None of our elected officials seem to be concerned about the economy of the state that happens to be one of the worst in the country.

  4. Fed Up With Idiots says:

    Hey, Great idea…If Whitehouse and Chafee think it’s so great, by all means they should be on it. Does FAT CHANCE mean anything to you.

  5. Eric says:

    Well, since the majority of govt. workers vote in Democrates and the likes of Chafee, yes, they deserve to be put on their messiah’s health plan. For you get what you vote for!

  6. doug in south county says:

    I think Steve D has a valid point here. Municipalities have contracts that even Gina R. would not touch. That often spells out the healthcare in definite terms just like their pensions. Many retirees received their medical benefits in lieu of pay raises, etc since it was great for politicians to say they held the line on pay increases. I know retirees in their 70′s and 80′s who would be instantly on welfare if this plan goes through and doesn’t cover their prescriptions.

  7. [...] entire state of Rhode Island is also considering the same move. This is due to the reality that the state has promised more than $3 billion in [...]

  8. [...] entire state of Rhode Island is also considering the same move. This is due to a existence that a state has betrothed some-more than $3 billion in [...]