Houston raises health care insurance for retirees by 50%

Houston Chronicle:

Working to close a looming $100 million budget shortfall projected for next year, Mayor Annise Parker has sharply increased the monthly insurance premiums that thousands of retired city of Houston employees must pay, prompting outrage from retirees.

Beginning May 1, more than 4,000 retirees under 65 will face a nearly 50 percent increase in their insurance premiums, a budget fix the mayor imposed without consulting City Council.

“The city is trying to balance their budget and they're doing so off the backs of the employees,” said Paulia Elam, a former employee of the city's legal, aviation and library departments. “These are people who worked for the city for 25, 30 years, picking up trash, crawling through sewage and, for police and firefighters, risking their lives every day. At a time in their lives when they have the most need for health care, they might not be able to afford the premiums. ...That's a tough pill to swallow.”

The change makes Houston one of many cities and states around the country that have looked to cutting retiree health costs or benefits to balance shaky budgets. In many cities, those efforts have been stalled because such payments are governed by contractual obligations.

In Houston, the city is contractually bound to pay for 79 percent of the health care costs of active employees. Retiree contributions, however, are not subject to those regulations.

For retirees under 65 with two or more dependents in the most highly utilized benefit plan, costs will increase from $790 a month to $1,179, according to a schedule presented to council members Monday. Across all categories of retired employees under 65, the average monthly increase will be about 49 percent. Previously, the city contributed 64 percent of the cost of health care for retirees in that group, but will contribute 52 percent under the new plan.

The city will save an estimated $7 million with the change.

Parker said the city decided to restructure the benefit payments because retirees under 65 have far higher use of insurance claims than active employees or retirees over 65, whose insurance is subsidized by Medicare.

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How is that hope and change working out for you? How is that new health care legislation working out for Houston retirees? The cost of this insurance was high before the rate increase. These people will be hoping they can hang on until they are eligible for Medicare.