Emergency Manager Kevyn Orr (David Coates / The Detroit News)
Detroit— A city retiree committee charged with negotiating health care and pension cuts is “frustrated” that Emergency Manager Kevyn Orr has renewed a plan to reduce benefits as much as 82 percent starting March 1.
But the emergency manager’s spokesman said Friday the city is forced to let retirees know what plan might take effect in less than two months if mediation talks don’t result in an agreement.
Committee Chair Terri Renshaw said in a Friday statement the city began mailing plan changes that mirror alterations that were unilaterally imposed on retirees late last year. The plan was withdrawn after several retiree groups, including the Official Committee of Retirees, filed a lawsuit to prevent it from being implemented.
By rolling out the plan, the city ignored alternative proposals that would have saved money while giving retirees and their families better coverage, the retiree group argues. It is considering its next steps, which could include reinstating the lawsuit.
“The Retiree Committee is frustrated that the City renewed its effort to fundamentally and unilaterally alter health care coverage for retirees on the eve of continued mediation aimed at resolving all retiree issues, including health care,” Renshaw said in a statement. “Such actions would be shocking but for the city’s track record of acting unilaterally and failing to negotiate in good faith. One would think that the City would have learned that such tactics do not constituent good faith or engender consensual results.”
Emergency manager spokesman Bill Nowling said mediation continues, and the notices the retirees received is to inform them what the new benefits would be should a new plan be implemented on March 1. He said the city similarly gave retirees a two-month notice in October on possible medical benefit changes that might have taken effect this month.
“This notification is something the city must do regardless of the progress being made in mediation,” Nowling said in a Friday statement. “This delay in implementing a new health care system for retirees is costing the city about $15 million a month.”
In early November, Orr’s proposed health care initiative for retirees was postponed until Feb. 28 under an agreement with the city and the retiree committee as they sought to negotiate an alternative arrangement.
Detroit officials sought to ax the city-paid $605-per-month retiree health insurance coverage ($1,834 for families). Instead those younger than 65 would receive a monthly $125 payment to use toward a private plan on the federal exchanges.
Disabled retirees younger than 65 were to get a $200 monthly payment for their health insurance needs.
More than 10,500 retirees older than 65 were offered a Medicare Advantage plan with city-funded premiums, but will be responsible for paying their deductibles and secondary insurance coverage, according to the plan.
Detroit’s 10,000 active city workers still are set to see their individual deductibles nearly quadruple to $750 from $200 annually, while employees with families on the city’s insurance will experience a 50 percent rise in their maximum annual out-of-pocket costs to $4,500 from $3,000.
In total, the retirees committee says the city’s current plan seeks to reduce annual health care spending for retirees to $30 million from more than $160 million a year.
The current proposal calls for an overall 82 percent reduction in health care benefits. It also requires a 15 percent share of costs covered for non-Medicare eligible retirees — down from 72 percent, retiree officials said.
It also causes $58,000 to $180,000 in additional costs for Medicare-eligible retires during a 15-year lifetime, according to the retiree committee statement.