A bill that would set aside at least 1% of the state budget to help pay for retiree benefits has been introduced in what amounts to a victory for opponents of a plan to deal with rising state retiree health costs.
Senate Bill 175 has sponsors from both parties and comes after fierce opposition to a proposal that would move state retirees to a Medicare Advantage plan that requires recipients to use a network of providers.
Medicare Advantage became a viable option when ChristianaCare, the state’s largest healthcare provider, rolled out an Advantage plan in conjunction with the state’s largest health insurer Highmark for all Delaware retirees on Medicare.
The initial recommendation came from a panel of stakeholders, including teachers and others well aware of the financial challenge. The plan was tweaked to give retirees time to find providers and cover provider gaps in areas where network physicians are sparse.
Retirees mobilized, forming a group known as RISE and claiming they were shut out of the process with the state turning its back on previous commitments. Legislation has been introduced that would put two state retirees on the benefits panel. RISE also tossed around the term “privatize” to describe Medicare Advantage, even though a private insurer offers the current supplement.
By contrast, many if not most private sector retirees have fewer options and often turn to Medicare Advantage or Medicare supplements that can cost hundreds of dollars a month for a married couple. The state deals with similar costs with its supplement.
Rise, led by retired state Rep. John Kowalko, D-Newark, claimed they are entitled to more lavish health care benefits due in part to the financial sacrifices made for working in state government. It is true that state payscales are often lower than those in the private sector.
The Medicare Advantage plan was delayed after a judge put it on hold, and now appears to be dead or breathing very slowly.
Medicare Advantage has its critics who cite denials, aggressive sales practices, and other issues. At the same time, Advantage programs have good customer satisfaction ratings, according to backers. The programs also work to hold down costs through preventative medicine and management of conditions like severe diabetes that often lead to frequent hospital visits.
The 1% plan would also address the underlying issue of chronic underfunding of retiree benefits. The potential shortfall may amount to $10 billion. A similar situation exists with state pensions, although that issue has been addressed to some extent. At first blush, the $10 billion shortfall requires an amount equivalent to 3 to 4% percent of the state budget.
Let’s also remember that state employees and retirees represent a powerful voting block in Delaware. With the downsizing of DuPont over the decades, the state government is the largest employer in Delaware by a wide margin, especially when teachers, who get much of their pay from state funding, are added in.
There’ s a reason why fiscal hawks in the General Assembly have not pushed for the Advantage plan, We also have a built-in conflict of interest since veteran legislators and even the judiciary will receive those benefits sometime in the future.
The long-term issue or the elephant in the room is whether state taxpayers can afford to pay health care benefits and fixed pensions at a time when other retirees have lost or never had such benefits. – Doug Rainey, chief content officer.
