San Bernardino to slash retiree health care in bankruptcy plan
By Tim Reid
Reuters, May 7, 2015
The southern California city of San Bernardino has proposed virtually eliminating retiree health insurance costs under a bankruptcy exit plan it must produce by May 31, according to an attorney involved in negotiations with city officials.
Steven Katzman, who represents a committee of retirees in talks with the bankrupt city, says a tentative deal has been struck under which retirees would sacrifice the city subsidies they currently receive for health care coverage in exchange for a guarantee that San Bernardino continues to fund and not cut current pension benefits.
The deal would follow an approach taken in the recent bankruptcies of Detroit, Michigan and Stockton, California, where retiree health care was slashed or eliminated, while pensions emerged relatively unscathed.
Retirees, including former police, firefighters and other city workers, can choose to stay with the city health plan, while paying all costs, or they can quit the city health plan and look for coverage in a health exchange, or if eligible, apply for Medicare, the government-funded healthcare program for the elderly.
By Don McCanne, MD
In designing the Affordable Care Act, one of the highest priorities was to protect employer-sponsored health plans since they were source of health care coverage for the majority of us. Certainly amongst the most reliable coverage are the plans provided for our police officers and firefighters. No.
As these and other public employees in San Bernardino and other bankrupt cities discovered, their coverage is vulnerable. These workers were forced into a deal wherein they had to give up the ironclad guarantee of retiree health benefits in exchange for protecting their pensions.
At least Medicare would be there for them once they became eligible, though they might face significant financial hardships in the interim. In fact, if we had an improved Medicare that covered everyone, it would always be there, not just for them but for all of us, and we would not have to rely on our employment as a source of health care coverage.
So the best – employer-sponsored health plans – do not provide the stability in health care coverage that we need, and these plans do not even cover over forty percent of us. Besides, the federal government is not subject to bankruptcy. With a single payer national health program, the government would always be there for us.