While uncertainty grows over the fate of universal health-care legislation, a bill to save an existing coverage plan for thousands of retired public workers is crawling through the Legislature.
The New Mexico Retiree Health Care Authority, which covers more than 41,000 retirees and family members, could go bankrupt in less than seven years without a funding increase.
The authority's fiscal health looked better just a couple years ago. But after a new analyst took a sharper look at the numbers, taking into account a higher than expected enrollment, the timeline was shortened to June 2014. With rising health care costs and a growing number of baby boomers yet to hit retirement, the problem is accelerating.
Sen. John Arthur Smith, D-Deming, acknowledges his bill to help the problem is a temporary fix. "It's like using a fly swatter on an elephant," he said in a recent interview.
Senate Bill 67 would push solvency to about 2027 partly by making permanent a $3 million-a-year appropriation approved on a temporary basis last year. It would also tap local governments across the state for a combined $1 million a year and call for employers, workers and retirees to pay more into the program. In some cases, the bill would also dramatically reduce the level of subsidization now provided to retirees and family members; some are now subsidized as much as 70 percent.
In all, the package would generate about $64 million a year, according to an authority actuary, but $200.5 million is needed to basically keep the program solvent into perpetuity.
Rep. Lucky Varela, D-Santa Fe, has authored similar legislation, House Bill 183.
Labor groups hope to stave off a part of the bill that would sharply increase premiums for workers and retirees.
Mary Howard, a retired Santa Fe elementary school teacher, said she pays $626 a month for health insurance for herself and her husband and daughter while receiving $1,583 a month in retirement income before taxes. SB 67 would increase her premium 20 percent, or to $751 a month, said Howard, who taught for 25 years and earned a master's degree.
"I think we would have to look elsewhere," said Howard, who's president of NEA-New Mexico Retired.
Some retirees would see sharper increases, with younger retirees receiving little or no subsidization. For example, under one plan, married retirees under age 50 who worked 20 years would see their premiums jump from $366 to $869 a month. Under the same plan, premiums for married retirees 60 and older would jump from $366 to $559.
Charles Bowyer, executive director of NEA-New Mexico, said the Legislature needs to take up a much bigger piece of the pie to ease the burden on retirees. "I think the solvency issue is one the Legislature is well aware of, and the Legislature needs to resolve the issue to make the system solvent," he said. "And that's not to say that all of us don't necessarily need to bear the pain."
The authority administers health-care benefits for retired state workers, local-government workers, educators and others. While employed, workers set aside some of their pay to reduce health-care payments during retirement. Many retirees, such as Howard, use it to bridge the gap between retirement and when they reach Medicare age. As retirees in the plan get older, their premiums are subsidized more.
Smith said the authority was set up in the early 1990s to assuage retired workers who had lost their tax-exempt status as a retirement benefit after a similar benefit arrangement in Maryland was ruled unconstitutional.
When he was a freshman senator in 1991, Smith said, he voted for establishing the retiree health care authority against the objections of then-Gov. Garrey Carruthers.
Smith said the retirement fund is not an entitlement that the state is required to fund, but he considers it worth saving. "It doesn't fit into universal health care," he said, "other that we will have a higher percentage of uninsured if we don't fix this thing."
Contact Doug Mattson at 986-3087 or dmattson@sfnewmexican.com.
