Memphis Mayor A C Wharton says city should stop paying for retiree health care
By Daniel Connolly, The Commercial Appeal, Memphis, Tenn. | |
McClatchy-Tribune Information Services |
"Get out of retiree health care. That is a big, big deal," Wharton said in a meeting with The Commercial Appeal's editorial board.
Wharton and his staffers have been talking about cuts to retiree health care for months, but his comments Friday mark some of his strongest language on the subject to date.
The city currently provides retiree health insurance through
They could join the federal
Collins said the city would continue to subsidize a group of retirees who cannot qualify for
Wharton's comments came four days before he's scheduled to give the
Tuesday's budget presentation is expected to kick off a monthslong debate that will bring big consequences for city services and property tax rates. State authorities and bond-rating agencies are pressuring the city to bring a pension shortfall under control. That's prompted Wharton to propose increasing the city's contribution to the pension fund from about
He acknowledged that cutting the benefits will hurt retirees. "Will that cause some pain on the front end when they have to pay more? Yes it will. There are no painless choices here," he said.
He argued that cutting health care benefits will treat taxpayers fairly and help the city keep a more important promise it made to retirees: to pay them a pension for life, no matter what, and when they die, to keep paying a pension to their spouses and dependent children.
Wharton said that right now, the city can't keep its pension promise. The city's experts estimate that as of
Laws block the city from simply cutting pension benefits for current retirees and more senior employees.
But the retiree health insurance benefits don't have the same legal protections, said city human resources director
The city currently provides health insurance to about 4,000 retirees, Robinson said. Of those, 1,500 have Medicare Part A and B and effectively use the city's insurance as a supplement, he said. Another 1,300 retired before age 65 and are not yet eligible for
In addition to the 4,000 retirees, the system also pays for health care for some family members.
At the
"I think that telling the taxpayers in this city that they're not going to have a tax increase over five years, that we're going to do it through efficiencies, is a lie," council member
On Friday, Wharton said for now, the city should focus on big-ticket items of cutting pension and retiree health care costs, rather than other cuts that could face legal challenges or other obstacles.
"We don't want to just so diffuse our energies that we don't deal with the make-or-break issue, which is (retirement health care) and pension." Wharton said.
In addition to the proposed health care cuts for retirees, Wharton's administration is proposing to cut future retirement costs by moving new city hires and those with less than 10 years' experience into a 401 (k) style plan. Rather than guaranteeing a payout for life, this type of plan pays according to the performance of stocks and other investments.
Labor unions strongly oppose the move, which shifts investment risk to the employees.
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