July 1, 2015

UGA Retirees Are Losing Their Longtime Insurance

Pub Notes

Photo Credit: University System of Georgia

"What, us worry?" The Board of Regents gets the University System of Georgia out of the health care business.

Remember those grey-haired couples in L.L. Bean outfits nodding their heads to the music on the fringes of the crowd during AthFest? They’re just about to lose their University of Georgia health insurance. Well, “lose” has been called incorrect by the University System of Georgia vice-president who manages insurance benefits. So, let’s try to be more precise. UGA retirees have previously been covered by health insurance that basically pays for everything that Medicare doesn’t. It’s a seamless system, basically without hassle. Of course, the retirees worked 20 or 30 years to get it, and they pay their monthly premiums.

The UGA employees (and other retirees throughout the USG) will no longer have their Blue Cross Blue Shield policies that supplement Medicare. They will, instead, have to purchase health insurance through a private exchange that enables retirees nationwide to purchase insurance. It’s like the newly re-authenticated Affordable Care Act exchanges, but it has no connection to those exchanges.

But wait: USG will contribute to a health reimbursement account for retirees, to help them pay for their new health insurance. With enrollment soon to open, USG still has not told retirees how much it will contribute; that will be announced in September, just before enrollment opens Oct. 1.

To read USG literature mailed out to those grey-haired boppers, this is a fabulous new development that will enable the L.L. Bean crowd to become informed consumers in the marketplace, where “dedicated” counselors will help them get better plans than they have now and probably at less cost.

Here’s hoping that’s true, because the prospect of plunging into the market to replace a plan that works well for them now is not something most old folks want to do.

Let’s leave aside the “bait and switch” aspect of working 30 years for a salary and defined benefits only to have those benefits drastically changed when retirement finally rolls around. And let's also leave out the fact that USG worked all this out in secret and has awarded a no-bid contract to a firm called Aon-Hewitt, a subsidiary of a worldwide benefits-management conglomerate. The Aon-Hewitt contract will not cost USG anything. Moreover, “Aon Retiree Health Exchange Benefits Advisors are not compensated to steer you toward any specific plan…” One assumes Aon does have a way of getting paid.

None of this is anything new. Large corporations have been bailing on their retirement commitments for years, and now that practice has spread to universities. Instead of underwriting increasing insurance costs, USG will just pay each retiree a flat fee—maybe. In its latest literature, USG tells retirees, “It is USG’s intent to continue to provide a retiree health care benefit.” Let’s hope that intent remains firm, even though, “There is no guarantee that the subsidy amount will increase from year to year.”

Interestingly, UGA retirees only found out about these changes to their health insurance through a leaked USG memo reported in this column in February 2015, but the university system could have been studying the subject at least as far back as November 2006, when Hewitt Associates, the parent company of Aon-Hewitt, published a study on “The Retiree Health Care Challenge.” That report basically lays out the steps later taken by USG, which turned for help to Aon-Hewitt. The driving force for all these changes is, of course, rising health care costs, but the real problem, according to USG and Hewitt, is not really rising costs, but changes in accounting rules that govern how these costs are treated as liabilities.

Well, all that is now numbers under the bridge. UGA retirees will be plunged into their own marketplace, just like other Georgians who have scrambled in the Obamacare exchange. There will be complaints, of course, because people are losing a good plan that they worked hard to earn, and now they’re forced to hope they can find something comparable with no guarantee that they can or that they’ll even have that option in the future.

At this point, it would probably be better just to dispense with Aon-Hewitt’s monopoly and open the process to the Affordable Care Act and to every insurance agent who wants to compete. Who knows? There really may be better deals in the marketplace, and UGA retirees might be smart enough to find them on their own.