The low information voters are in for a bad time when the bills finally come due.
Detroit To Dump Retiree Health Costs On ObamaCare
By JED GRAHAM, INVESTOR'S BUSINESS DAILY
Posted 09:18 AM ET
The federal government isn't among the creditors Detroit has turned to for mercy, but U.S. taxpayers will bear a large share of the cost of its restructuring.
High on emergency manager Kevyn Orr's to-do list: slash health care outlays for thousands of early retirees by shifting them to ObamaCare.
Detroit spent $177 million on health benefits for 19,000 retirees last year but figures it can cut that to $28 million-$40 million a year.
Part of the savings would come from paring supplemental coverage for retirees age 65 and older, most of whom already get Medicare.
But the federal government will pick up much of the slack for early retirees through age 64, who will be eligible for subsidized coverage as long as household income is less than 400% of the poverty level.
The news is hardly surprising. While the Motor City is an early mover when it comes to shifting early retirees to ObamaCare, it's not alone and the road for doing so has been well-paved.
Last month, Chicago Mayor Rahm Emanuel — Obama's chief of staff when the law was passed in 2010 — disclosed that the Windy City would shift 30,000 early retirees to ObamaCare. Last year, retiree health care cost the city $109 million, but that's projected to balloon to $500 million within a decade.
Sheboygan County, Wis., also has crunched the numbers and envisions saving $286,000 in the upcoming fiscal year by shifting early retirees to ObamaCare's exchanges starting Jan. 1.
ObamaCare's crafters intended to provide an alternative to employer-provided coverage for retirees, which had long been in decline.
The law set aside $5 billion to offset employer costs from June 2010 until the launch of the subsidized exchanges at the start of 2014. The funds, to reimburse 80% of per-person claims between $15,000 and $90,000, were exhausted by December 2011. New claims were rejected.
About half of the employers who signed up for the program were government entities, including the city of Stockton, which has sought to dump retiree health care in bankruptcy proceedings.
Stockton public employee retirees recently agreed to accept $5.1 million in a lump sum, which is equal to just 2% of their lost health benefits.
The Early Retiree Reinsurance Program was described by the Department of Health and Human Services "as a bridge to the new health insurance Exchanges."
The implication was that employers would cross that bridge by shifting coverage to the federal government come 2014.
While relatively few government entities have declared such an intention, it seems logical to expect many to make that move in the next year or so.
As governments struggle with massive liabilities for pension and health benefits, court rulings have lent support to the contention that pensions are protected under state constitutions. On the other hand, rulings in a number of states have found no such protections for health benefits.
In a recent column, former Comptroller General David Walker wrote that ObamaCare presented "a huge opportunity for states and localities in desperate need of fixing their long-term finances."
He predicted: "The overall tax burden will shift, and in ways that Americans in other more fiscally responsible states may not appreciate."
Walker also warned that the influx of older, high-cost patients into ObamaCare would put upward pressure on premiums and make it less likely younger workers would sign up.
Read More At Investor's Business Daily: http://news.investors.com/061813-660353-detroit-chicago-shift-retiree-costs-to-obamacare.htm