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Eye On Boise

Thu., Feb. 12, 2009, 8:34 a.m.

Chilly reception for retiree health benefit cut

It failed last year, but the Otter Administration is pushing forward again with legislation to cut back health benefits for state retirees. It got a chilly initial reception yesterday in the House State Affairs Committee, but the bill's not dead yet. Click below to read the full report from AP reporter John Miller.

Idaho House leery of ending retiree insurance
Associated Press Writer

BOISE, Idaho (AP) — Lawmakers remain leery of jettisoning state government retirees from Idaho's public employee health insurance plan.

For a second straight year, the House State Affairs Committee on Wednesday refused to back a measure being pushed by Gov. C.L. "Butch" Otter, demanding instead more details about its effect on up to 400 retirees with high prescription drug costs. A renewed hearing could come by next week.

The bill would end state retiree insurance benefits for new employees. Current workers who retire after age 55 would get a $100 monthly state subsidy, down from $155 now, and Medicare-eligible retirees 65 and over would be shifted onto private supplemental insurance plans.

Idaho has about 3,155 retirees and about 1,300 dependents who get state insurance, down about 226 from last year. About 850 retirees are under 65.

Department of Administration spokeswoman Teresa Luna said many Medicare-eligible retirees now on the state plan would actually pay less for private supplemental plans, but she concedes some with pricey prescriptions could face thousands of dollars in new expenses.

One such retiree, Don Brennan, told the committee he fears his costs will rise astronomically.

Brennan said he takes 10 medications daily, including three that cost $200 to $300 per month, for diseases including Non-Hodgkin's lymphoma, prostate trouble and the effects of heart bypass surgery.

"There are a number of people out there who won't be able to afford their medications," said Brennan, who is against the measure.

Luna said private plans offered by insurers such as Blue Cross and Regence Blue Shield would save 2,300 retired Medicare-age Idaho workers now on the state plan between $38 to $179 in monthly premiums. Still, some plans have a coverage gap, or "doughnut," where retirees must pay all their annual drug costs between $2,510 and about $6,500.

Though the Department of Administration has offered $2,000 in assistance for the next two years for those affected, people like Brennan would still face some $4,050 in new out-of-pocket expenses, according to the state's estimates.

Otter's bill failed a year ago in the House after retirees and state worker unions complained the governor didn't adequately inform them about the changes. Consequently, Department of Administration Director Mike Gwartney held some 30 meetings in 15 cities last summer and fall before making another attempt this year.

Though workers groups praise Gwartney for reaching out, they told the committee Tuesday the measure still falls short.

"We really hope you can go a little further in helping those people in the doughnut hole," said Donna Yule, Idaho Public Employees Association executive director.

Otter wants to cut retirees from the state plan because consultants estimate Idaho's unfunded health care liability is due to rise from $477 million this year to $800 million by 2016, as more baby boomers retire. Unfunded liabilities are promises to pay long-term benefits on a "pay-as-you-go basis," not funded from a trust fund, such as pension plans.

Public employers like Idaho are being required to report such liability to bring their books in line with private sector practices. Such liability could affect how investors judge Idaho's ability to pay its debts, Luna said.

"We expect it will have an impact on our credit and bonding scores if we don't have a plan to mitigate it," she said.

State Treasurer Ron Crane didn't immediately respond to a question about the significance of unfunded liabilities for Idaho.

The notion of changing course with retiree insurance just to bolster Idaho's balance sheet is frightening for government retirees, they told the committee. Roger Gehrke, a Department of Health and Welfare early retiree, said he pays $1,006 monthly so he and his wife can stay on the state plan.

If Idaho cuts the current $155 subsidy to the $100 now being offered, Gehrke said, "I'll probably go someplace else."

Rep. JoAn Wood, a 14-term Republican from Rigby, told the committee she's served nearly three decades under the premise Idaho would always be there for her, even in retirement. She said she's willing to take her chances on the state system, even if it's more expensive than a private Medicare supplemental plan.

"I know with the recent operation I just had, my doctor would not have taken me if I had just had Medicare," Wood said. "Medicare is about as solid as jelly. I think I paid my fair share to the state of Idaho for what I thought would take care of me for the rest of my life."

The Associated Press

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Eye On Boise

News, happenings and more from the Idaho Legislature and the state capital.