The New Mexico Retiree Health Care Authority, seeking to avoid deficit spending of between $7 million and $8 million next year, will make changes beginning next year.

The authority provides group health care coverage for thousands of retirees from state, city and county governments, higher education and public schools.

The changes, approved at the authority's annual board meeting, bring mixed news. Members will be able to choose plans that could cost significantly less, although some could see costs increase as much as 40 percent.

Members will get letters in the mail soon outlining all the changes, said Wayne Probst, the authority's director.

"A vast majority (of retirees) could see their costs go down," he said. "Once members take a look, they'll see these are still very generous plans, and still a very good plan for a good price."

The changes will mean different things to different retirees, depending on which level of the program they are enrolled in and whether they are Medicare or non-Medicare members.

The authority has 15,000 non-Medicare members and 24,000 Medicare members. Medicare is the federal health program for seniors. The authority will consolidate its three non-Medicare plans into two.

The 2010 costs will also depend on whether retirees and/or their spouses stick with their current plan or switch to one of the new ones that will be offered.

In general, the changes mean:

• 12 percent of non-Medicare retirees and spouses could see their premiums increase by about $9 a month.
• 88 percent of non-Medicare retirees and spouses could see a decrease of between $32 and $166 for their monthly premium.
• 93 percent of Medicare members and spouses could see a premium decrease or a small increase, ranging from 1 percent to 5 percent. The premium increases range from 6 cents per month to $6.36 a month for retirees and between 9 cents and $9.54 per month for spouses.

Probst said the authority will launch an aggressive campaign to explain the changes and help people make a switch if they choose. He expects between 30 percent and 40 percent of members to choose a new plan.

Already, state Rep. Lucky Varela, D-Santa Fe, said, the authority needs to look into alternatives to the premium increases.

"Times are hard, and people don't understand the recession has cost us some problems, especially retirees," he said. "With all due respect to the board, to do this strictly on the backs of retirees concerns me."

Probst said the authority would consider any alternative the Legislature presents.

"Nobody wants to see their costs go up, and that is understandable," he said, "and the board has taken that into consideration."

But, he said, the authority also cannot run a deficit.

If it didn't make changes for next year, "the alternative would be to deficit-spend and dip into our fund balance. That shouldn't be a last option — that shouldn't even be an option."

Overall, the authority recently has improved its financial health, partly with changes to employer and employee contributions approved by the Legislature. One bill passed this year requires public employees and government employers to pay more, while another means future employees will have to work longer before they can retire and collect full benefits.

Once expected to be insolvent by as early as 2017, the authority is now expected to remain solvent until at least 2028.

Alfredo Santistevan, chairman of the health care authority board, said the changes are part of the board's commitment to keeping prices affordable for current retirees while balancing the needs of future members.

"While the board does not take increasing premiums lightly, these modest changes are in line with the national medical trend, and responsive to concerns from the Legislature and others that in the past, the board has not been responsible in their stewardship of this important benefit," he said in a statement.

Contact Kate Nash at 986-3036 or knash@sfnewmexican.com. Read her blog at www.greenchilechatter.com.