February 25, 2015

UGA Retirees Are Losing Their Health Insurance

Pub Notes

You kids are probably not aware of it, but UGA retirees and their spouses who are on Medicare have secondary coverage through Blue Cross Blue Shield, and that means all their health care expenses are pretty much covered. They have to pay a monthly premium to BCBS, the odd fee here and there and a prescription co-pay, plus the occasional difference in what the plans will pay, but basically UGA retirees and their spouses have all medical expenses covered. All the recent debate about Obamacare has just served to remind UGA retirees and their spouses of how lucky they are.

A recently leaked memorandum from the Board of Regents of the University System of Georgia to “Senior USG Leadership” brings the news that UGA retirees and their spouses will no longer enjoy that comprehensive coverage but instead will have to buy their supplemental insurance through a “marketplace” exchange just like everybody else. Instead of the BCBS plan, retirees and spouses will get monthly payments from the University System into a health maintenance account, and they can use those payments to help defray the cost of insurance to supplement Medicare. The amount of the University System payment into the health maintenance account has not yet been determined. Nor has it been determined whether that will be a set amount or one that is pegged to increases in insurance costs.

Excerpts from the Memo:

“Over the last few years, the Board of Regents has been reviewing and expressing concern over rising retiree health care costs… our liability has increased exponentially each year, highlighting the need to address rising retiree health costs…

“Then, effective January 2016, USG Medicare eligible retirees/Medicare eligible dependents will receive retiree healthcare benefits through a defined contribution to a healthcare account which they will use to purchase coverage through market place exchange options outside of the USG healthcare plan…

How will older retirees and their 'survivors' fare in the insurance marketplace, even in one specifically designed for older customers?

“All USG Medicare eligible retirees and covered Medicare eligible spouses will transition to the Retiree healthcare exchange options in 2016. Retirees and covered spouses who are not Medicare eligible will remain on the USG retiree healthcare plan options until they become Medicare eligible, at which time they will move to the retiree market place exchange options. There is no grandfathering under this approach…

“The University System of Georgia will make contributions to a defined healthcare account, commonly referred to as a Health Reimbursement Account (HRA), on behalf of Medicare eligible retirees as their retiree healthcare benefit. The defined contribution amount is still being determined…

“Retiree healthcare private exchanges offer a wide variety of medical plans and prescription drug options through several different insurance companies and include Medigap, Medicare Advantage plans, and Medicare Part D plan options. For retirees, this means having a greater range of plan choices, including various plans, carriers, and price points available. With the healthcare exchange option, the retiree will be able to choose best-in-market plans, maximize the value of each dollar spent on healthcare premiums since the retiree will be able to choose coverage specific to their needs. In addition, there is a strong focus on retiree enrollment and support through decision support tools as well as customized communications which will also be managed through the exchange vendor and targeted specifically to Medicare eligible retirees…

“An advantage to USG is the ability to capture savings and reduce the amount our OPEB [Other Post Employee Benefits] liabilities rise each year.”

What Does It Mean?

Obviously, in spite of the rose-colored bureaucrat-speak, the key to the whole change is whether the university system’s contribution to the health care account is sufficient to buy supplementary insurance that meets retiree’s needs and to keep up with its price increases. As the so-called “survivor” of a UGA retiree who worked long hours for many years grading mountains of undergraduate papers to provide insurance for us in old age, I have a personal stake in this matter. And that, of course, is another key: How will older retirees and their “survivors” fare in the insurance marketplace, even in one specifically designed for older customers?

And of course the University of Georgia is already, according to President Morehead, falling drastically behind in its ability to pay faculty and compete for new professors against peer universities. What effect will dropping supplementary insurance have on recruitment? Will prospective professors prefer a university that provides health insurance over one that merely will help them find something in the market place? This is especially pertinent to recruiting the middle-aged “superstar” faculty who can add so much to a department, to the whole university and to Athens.

The Board of Regents, like large corporations, has a growing number of retirees who are living longer. It is only natural that their numbers-crunchers, like corporate counterparts, see whacking retirees as a way to cut costs, and since most of the Regents are business people appointed by the governor, that makes sense in their world, too. Unfortunately, in Georgia cutting education is merely business as usual.

You no doubt remember that slur aimed at an honorable profession: Bankers are people who will lend you their umbrella when the sun is shining and ask for it back when it’s raining. Looks like the same can be said for the Board of Regents, as it prepares to renege on the promise that made it appear worthwhile to grade all those papers.