From: GOVERNING Management
To: Scott Jenkins,
Subject: Cities Stop Covering Retired Workers' Health Care
Date: Thu May 22 18:09:41 MDT 2014
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GOVERNING March 2014
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Public Officials of the Year

Public Officials of the Year 2014

It's that time of year again. Take a moment to tell us about an outstanding state, city or county leader who has shown courage, innovation and excellence in his or her job. Submit your nominations here.

Cities Stop Covering Retired Workers' Health Care

BY HEATHER KERRIGAN

Before the health insurance marketplaces went online in October, a number of state and local governments considered the cost-saving measure of sending their employees and retirees to the exchanges instead of continuing to cover their health insurance. Much of the talk has been speculative, but a few cities are actually making moves -- at least where retirees are concerned.

The exchanges have been an attractive option for many private-sector companies, but the public sector has been much slower to send employees or retirees to the exchanges for health insurance. It's a difficult balancing act that could present long-term cost savings for governments and employees but could also hurt recruitment and retention efforts.

In Detroit -- where retiree health care and benefit liabilities make up nearly half of the city's unsecured debt -- Emergency Manager Kevyn Orr fought hard for his proposal to send retirees to the exchanges for health insurance as part of the city's plan to exit bankruptcy. City retirees, backed by Detroit's largest union, sued to block the action in October. On top of that, the technical difficulties facing the exchange led Orr to delay the change from Jan. 1, 2014 to Jan. 31, 2014, at which point retirees would either have to enroll in Medicare or find their own coverage through the exchange.

Then on Jan. 31, the city reached an agreement with retirees to drop the lawsuit and provide $125 to $300 a month to retirees over age 65 who do not qualify for Medicare, $125 to spouses who aren't eligible for Medicare and who have a household income of less than $75,000, and $175 for retirees under age 65. In addition, a city-sponsored health insurance plan was created for those not eligible for Medicare, but anyone choosing to enroll would only receive a $100 per month contribution from the city. On March 1, the city stopped providing health insurance to retirees.

Because the city has so many retired employees with so many different health plans, it can’t offer precise predictions on any possible savings. Keep Reading >>

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The B&G Report

BY KATHERINE BARRETT & RICHARD GREENE

Who do you trust? There’s been a lot of press coverage about the lack of trust in government, including state and local entities. Many of the readers of the B&G Report are employees of states and localities. So, we want to turn the table. Please tell us: Do you trust your citizens to understand government management and make appropriate decisions about it when given the chance? We’ll keep responses anonymous!

We're sympathetic to the revenue needs of states and cities, but a recent court case involving Louisiana’s effort to get its hands on federal money demonstrates that sometimes governments may reach too far. The case involved money that the state received from the feds between 1996 and 2006 for uncompensated Medicaid care. The federal government traditionally provides funding to reimburse states for hospital care for the uninsured. In this case, the feds reimbursed for hospital care in which costs were determined based on estimates. Louisiana argued that when the estimates were too high, it didn't have to give back the money. On the other hand, when the estimates were too low, it could collect additional federal dollars.

The federal government clamped down on this practice back in 2012, and Louisiana choked up some $240 million -- but not without appealing the case. Now, the U.S. Court of Appeals for the 5th Circuit rejected the state's argument, saying that the state was laying claim to "an asymmetrical retrospective payment system.” Fancy words, but we’d put it another way: We believe Louisiana was arguing from the “what’s mine is mine and what’s yours is negotiable” school of government accounting.

Not so long ago, we had lunch with a very smart, successful woman who we’ve known for years. The conversation turned to government, and we tried to explain what we do for a living. That was more complicated than we anticipated. She was surprised when we explained that there was a lot more to government than just politics. The idea that there was a management side had never even entered her mind. Keep Reading >>

 

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