Retiree benefits subcommittee discusses Medicare plans
The state has a variety of ways to lower what it’s paying for retiree healthcare, a new benefits subcommittee was told Thursday.
For current workers, they include:
- Cutting benefits for current employees by doing things like reducing benefits for spouses.
- Changing benefits given to people who worked for the state but didn’t retire with the state.
- Establishing a minimum age to qualify for certain benefits.
- Changing the time it takes for employees to fully invest shares.
For retirees, those include:
- Moving to Medicare Advantage
- Using a Supplemental plan with different premiums
- Using a Health Reimbursement Arrangement
- Adjusting the cost share through the legislature.
Few details were given about those ideas as the State Employee Benefits Committee Retiree Healthcare Benefits Advisory Subcommittee met for the second time Thursday to deal with Medicare benefits for retirees.
Bill Oberle, a member of the subcommittee, said that he doesn’t have enough information at this time to make a decision regarding the Medicare Advantage plan.
Denise Allen, another subcommittee member, said that there hasn’t been enough analysis done on the Medicare Supplemental plan and that there’s not enough information put out by the state on what the plans would entail.
The subcommittee was created earlier this year, spurred on by the outrage last year over a state plan to switch retirees from their current plan to a Medicare Advantage program.
Retirees revolted, saying the move was made in secret, although it wasn’t, and that it would cause a lot of problems for them. Those problems include making them switch doctors and require pre-authorizations for things they don’t have to know.
Richard Geisenberger, secretary of the Delaware Department of Finance, repeated that one of the reasons for the move was to better control the costs of future health care.
If health care costs keep rising as they are now and the state keeps paying as it is now, Delaware’s unfunded liability for health care plans is expected to grow to $31 billion by 2050.
Adopting the Medicare Advantage managed plan would have helped the state have only a $3 billion deficit by 2050.
The lack of funding has already caught the attention of the nation’s bond-rating companies,
Geisingberger said, and could mean Delaware’s rating is dropped below AAA, causing the state to pay more for any money it borrows.
Delaware has been putting about $45 million each year – 1% of the state budget – into the Other Post Employment Benefits Fund to help cut into the deficit. Last year, it kicked over tens of millions from its budget surplus to help reduce the deficit more quickly and Gov. John Carney proposed doing that again with the 2024 budget, which starts July 1..
There’s no silver bullet to cut costs, Geisenberger said.
Even so, “this is very fixable problem,” he said.
Some opponents to the changes have accused the state of trying to solve the problem by raising costs for current employees, he noted.
“That’s never what was considered by the retiree benefits subcommittee,” Geisenberger said.
Wayne Emsley, the New Castle County retiree on the subcommittee, made a presentation to the group showing that Delaware retirees make less on their pensions and Social Security than the average state employee salaries.
However, he said, they pay for more monthly premiums than state employees,while Medicare retirees cost the state less per month.
Monthly premium costs for state employees range from $30.22 to $114.30 a month, depending on what plans they choose, while Medicare retirees pay $164.90 per month, Emsley said.
Pensioners would prefer the current plan even if it meant increased costs to all retirees in the short and long term, he said.
During public comment, Barbara Philbin told the committee that a report put together by Delaware retirees shows many other states offer more options through a Medicare Supplement program versus the more restrictive Medicare Advantage plan.
Annette Shine, a retired University of Delaware professor who lives in Ohio said she couldn’t use the Medicare Advantage plan offered by Highmark Blue Cross Blue Shield Delaware because she doesn’t live in Delaware.
“I just want you to recognize that there are real people behind these scenarios. The choice you give me is no coverage from you at all, or abandon my family, and that’s a no brainer,” she said. “But I don’t feel it’s fair to me to be shut out of any other option for help with my coverage.”
Senate Majority Leader Bryan Townsend, D-Newark, a member of the committee, said the committee has a lot of work to do to be able to offer a plan by May, a goal many agreed it may not be able to meet.
There are still a lot of questions to investigate and options to narrow down for possible solutions that work well for everybody, he said.
The subcommittee will finalize recommendations for what kind of plan the state should offer retirees by the end of April, with three meetings planned between now and then to get more information and get more public input.
The subcommittee’s next meeting is on March 22. Watch it here.
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