Retirees' Stake in National Health Care Reform
The American health care system is a lot like an old jigsaw puzzle: odd-shaped pieces fit together to form a picture, but missing pieces leave big holes. In the health care picture, the holes include 46 million uninsured, lack of system-wide planning, an absence of cost-containment policies and many more. Clearly, the system is broken and needs reform. Here's why our union's Campaign for Affordable Health Care is important for all AFSCME retirees.
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Medicare costs are on the rise. The population is aging, Medicare beneficiaries are living longer and costs throughout the health care system are exploding -- three major reasons why Medicare costs are going up. According to the 2009 report of the Medicare Trustees, Medicare's Hospital Insurance Trust Fund will start showing a shortfall in 2017. Changes must be made, but they need to be the right ones -- new efficiencies and money saving measures that stretch dollars without penalizing seniors. The Part D prescription drug program is a good example of how the wrong approach can lead to confusion and waste instead of better health care.
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Medicare coverage doesn't begin until age 65. As a result, those who retire before that age without employer-paid health benefits have a serious problem. For retirees age 55 to 65, health insurance costs an average of $4,000 a year ($8,000 for couples). That's pretty steep for most retiree pocketbooks. The only alternative, however, is to join the ranks of the uninsured -- a dangerous situation for an older person, particularly if you have to retire for health reasons.
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Public-employer plans are shifting costs to retirees. According to a recent AARP survey of state-retiree health plans, the 43 responding states said they'd been experiencing average annual cost increases of 15 percent. Two-thirds said these rising costs were "very important" in terms of state budgets and potential cost-shifting to retirees. Almost all states have taken some action to control costs, including changing benefits, increasing retiree cost-sharing and pushing retired employees into Medicare Advantage plans (these plans replace both Medicare and coordinated employer-run plans with undependable private insurance). These trends are accelerating and AFSCME is fighting retiree health care cuts across the country.
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GASB rules are heightening threats to retiree coverage. The Governmental Accounting Standards Board (GASB) has established new rules that change the way public employers account for the cost of their retiree health coverage. Until the new rule, balance sheets for most state and local governments showed only current-year expenses for these benefits. Now, they must also show their future liability for retiree health care -- including retirement costs for today's workers -- even though most of that money won't be paid out for decades. Some jurisdictions have calculated astronomical amounts, claiming their long term obligations could lower bond ratings and inhibit their ability to raise money.AFSCME is trying to calm the GASB-inspired media frenzy and prevent a taxpayer backlash, arguing that the new rules only affect book-keeping practices and don't require governments to change the way they fund benefits. Nevertheless, when the private-sector started dealing with similar rule changes in the 1990s, many large companies feared their large liabilities could reduce stock prices. So, they eliminated or cut way back on retiree health care to satisfy stockholders. AFSCME thinks that pressure from taxpayers could encourage public employers to do the same.
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National health care reform can control costs, preserve benefits and insure everyone. Unless big changes are made throughout the health care system, workers and retirees can expect an endless round of benefit cuts. Many of us could become uninsured. Finding ways to cover more Americans can make a big difference. That's because health care providers tend to shift the cost of uncompensated care to those who have insurance -- raising costs for employers and people who buy coverage on their own. Lack of system-wide planning means hospitals in the same area duplicate services -- a practice that's wasteful and drives up prices. A more organized approach would save money for everyone. Similarly, sound cost-containment initiatives could save millions in drug prices alone.
AFSCME and others have lots of practical ideas for health care reform, but only the vocal support of average Americans can make them a reality.
For more information, contact:
AFSCME Retirees Department
1625 L Street, N.W.
Washington, DC 20036-5687
202-429-1274
www.afscme.org