Tuesday, November 16, 2010

San Angelo's Invisible ERRP

During the budget process, San Angelo City Council postponed addressing health insurance.  The numbers, pictured above, were the last the public knew about the issue, until today's Council meeting.  In the interim, the City successfully applied for the Early Retiree Reinsurance Program, which has the federal government reimbursing retiree claims.  ERRP pays 80% of costs between $15,000 and $90,000.  Savings are expected to be $650,000 over a two year period.  GoSanAngelo reported:

“It will either be a better benefit or their premiums can be lowered. Those are the two choices we have to use the funds for,” said the city’s Human Resource Director Lisa Marley, noting the city has yet to determine whether it will put the funds toward claims or premiums although it may be “easier to put toward claims to allow employees to have better coverage.”

"...the program will help offset costs for the city and its early retirees, Marley said

The city is self-insured.  It covers employees and retirees in two separate plans.  Mayor New said BlueCross/BlueShield's rates would increase $960,000 from the prior year, an increase of 10-15%.  The City is financially strapped, given property and sales tax staying level or declining.  That means passing on increased costs to those covered.

Retirees and employees lined up for public comment.  Familiar themes were the rushed nature of the agenda item, the lack of information shared with those impacted and the failure for leaders to meet with employees to understand their needs.

“The problem is there are $1 million of new expenses and there’s not any new revenue, “ said Mayor Alvin New. “So how do you want to pass on for the employees the ability to have the same health care coverage they have ... and how you want to pay for it? That’s what this is about.”

City leaders avoided their receipt of ERRP funds, expected to be $307,000 the first year and $343,000 the second.  When challenged by Russell Smith, retired Police Chief and Justice of the Peace, Veronica Sanchez only gave the name of the program.  HR Director Lisa Marley was not at the meeting.  Also missing in news coverage, when did the City receive bids on their self insurance plans?

City Council and paid leaders purposefully kept ERRP monies out of the discussion.  Surely, they knew of the city's windfall, courtesy of Uncle Sam.  Why? Health & Human Services expects ERRP reimbursement to keep health insurance affordable for retirees.  How is the City planning to use ERRP funding?  The public deserves an answer.

The City Council is a microcosm for American society.  Obama's Deficit Commission hopes to cut Social Security by reducing benefits and/or increasing the retirement age.  Within three years, City retirees will pay the same amount in premium sharing as employees.  By then, the City will have received up to $810,000 in federal reimbursement for retiree claims.

Given the City kept ERRP off the table, it must have plans for the money, other than Lisa Marley's stated promise.  Retirees will not see their premiums go down.  The lack of honesty is disturbing.  It's anything but terrific news.

One employee suggested the city provide assistance for employees, who can't afford huge dependent premium increases.  He thought the City could help enroll dependents in Medicaid or CHIP.  Given the City jettisoned its Social Services workers, this added to the "down the rabbit hole" nature of the meeting,

The final plummet came at near the end of the meeting, when the Council approved a new holiday for workers, Veterans' Day.  If the City can't afford to pay more for health insurance, why did Council increase the paid time off benefit?  Another vacation day cost $135,000.

Combine the first year of ERRP ($307,000) with the new vacation day ($135,000) and you get $442,000, nearly half of the $960,000 shortfall.  The maximum ERRP reimbursement over two years ($810,000), plus the vacation day, knocks out almost the whole amount.

If City Council won't talk about it, what can retirees do?  The message is clear.  Don't be a senior, much less an early retiree.

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