MA Gov. Seeks to Save $20 Billion on Retiree Health Care for Public Employees

Massachusetts Governor Deval Patrick announced a series of legislative proposals Friday to overhaul retirement health benefits for state and municipal employees. He says the proposed changes would save the state $20 billion dollars over 30 years, and make the benefits program more sustainable long-term.

The Governor’s proposal was developed by a state-appointed commission that studied the rising cost of retiree health care. The proposal would raise the retirement age for most workers from 55 to 60, increase length of service to qualify for retirement benefits from 10 to 20 years, and result in higher premium costs for future retirees. The plan has the support of some public employee unions. Jim Dirkin, a Massachusetts spokesman for the American Federation of State, County, and Municipal Employees, or AFSCME, says while no labor organization is completely happy with the proposal, he sees it as a necessary step.

“The bottom line is the cost of retiree health care is a very real and very significant long-term liability for state and municipal budgets. Something needed to be done to address the problem over the long-term.”

But the proposal is opposed by the Massachusetts Municipal Association. Geoff Beckwith, executive director of the MMA, says while he agrees with making retirement benefits more sustainable, the proposal doesn’t allow for near-term savings. He claims 95 percent of the savings wouldn’t be passed along to municipalities until 2024.

“And we can’t wait that long for relief because health insurance costs for retirees are expected to grow by 50 percent for local taxpayers over the next decade.”

Beckwith says the savings will be delayed in part because cities and towns will not be able to negotiate health care premium rates with their employees as they now can. Patrick’s proposals now go to the legislature.