Members of the SHARE leadership team recently traveled into Boston for the open hearing on House Bill 59, Governor Patrick's proposal to change the structure of the Retiree Health Benefit for State Employees. (For background, please see this previous post about the details of the bill, and this update about the status of the bill, prior to the open hearing, which includes information about how to be involved.)
I'll do my best to provide meaningful highlights. The hearing went several hours longer than the two hour scheduled meeting time, and there were plenty of colorful details. Hundreds of opponents to H59 filled Gardner Auditorium on Beacon Hill. Although the status of the bill is not yet certain, and no one can know what subsequent proposals might target State Employee benefits in the coming years, I think SHARE members have good reasons to be optimistic that their Retiree Health Benefits will not be taken away as a result of this particular bill. To pass it, the outgoing Governor has a lot to overcome, and not much time to do it. Most members of the Committee reviewing the Bill, The Joint Committee on Public Service, expressed grave concerns about the spirit and structure of the cost-shifting involved in the bill. (Representative James Miceli likened the "shifting" to "shafting.") Though the Committee's questions were measured, and seemed genuinely to get at understanding all of the arguments involved, I didn't hear any individuals on the Committee mention any support for the bill; some explicitly stated that they would not support it as it is written.
Members of the Committee first heard from Glen Shor, Secretary of the Executive Office for Administration and Finance, and his panel, to explain the rationale behind the bill. They explained that, unlike the State Pension program, the Retiree Health Benefit is unfunded, and that their current calculations show that the Benefit represents a 46 billion dollar liability for the state of Massachusetts. They explained that the bill is designed to bring costs in line by year nine of its implementation, and save one billion, cumulatively, by the end of that first decade. Due to the grandfathering clauses, the state would not fully realize the financial impact of the bill for roughly thirty years. (It's worth noting that there was grumbling both from the audience--and from the Committee itself--about the lack of quantifiable details regarding the proposal from the Secretary's panel. Senator Dan Wolf put it most plainly as he searched for answers about how the Bill would affect individuals, noting that Massachusetts employees are entitled to a sustainable State budget, but not at the expense of "sustainability around the kitchen table" as they calculate their home budgets.)
Many, many groups and individuals testified, representing towns, taxpayer groups, unions, and employee advocacy groups. The committee heard from UMass employees at various campuses. Shawn Duhamel, of MassRetirees, (who has visited the UMMS campus to talk with employees and members of Human Resources about H59) testified alongside the AFL-CIO. Even Ebba Hierta, the library worker who created the popular Facebook page, Stop Massachusetts Bill H59, came to explain how passage of the Bill would force her to retire from the job she loves, several years earlier than she intends . . . and at greater cost to the State, since it would be paying her benefits sooner, in addition to the wages and benefits of her replacement.
The long conversation flushed out several concerns and criticisms. In addition to those mentioned above, these included:
I'll do my best to provide meaningful highlights. The hearing went several hours longer than the two hour scheduled meeting time, and there were plenty of colorful details. Hundreds of opponents to H59 filled Gardner Auditorium on Beacon Hill. Although the status of the bill is not yet certain, and no one can know what subsequent proposals might target State Employee benefits in the coming years, I think SHARE members have good reasons to be optimistic that their Retiree Health Benefits will not be taken away as a result of this particular bill. To pass it, the outgoing Governor has a lot to overcome, and not much time to do it. Most members of the Committee reviewing the Bill, The Joint Committee on Public Service, expressed grave concerns about the spirit and structure of the cost-shifting involved in the bill. (Representative James Miceli likened the "shifting" to "shafting.") Though the Committee's questions were measured, and seemed genuinely to get at understanding all of the arguments involved, I didn't hear any individuals on the Committee mention any support for the bill; some explicitly stated that they would not support it as it is written. Members of the Committee first heard from Glen Shor, Secretary of the Executive Office for Administration and Finance, and his panel, to explain the rationale behind the bill. They explained that, unlike the State Pension program, the Retiree Health Benefit is unfunded, and that their current calculations show that the Benefit represents a 46 billion dollar liability for the state of Massachusetts. They explained that the bill is designed to bring costs in line by year nine of its implementation, and save one billion, cumulatively, by the end of that first decade. Due to the grandfathering clauses, the state would not fully realize the financial impact of the bill for roughly thirty years. (It's worth noting that there was grumbling both from the audience--and from the Committee itself--about the lack of quantifiable details regarding the proposal from the Secretary's panel. Senator Dan Wolf put it most plainly as he searched for answers about how the Bill would affect individuals, noting that Massachusetts employees are entitled to a sustainable State budget, but not at the expense of "sustainability around the kitchen table" as they calculate their home budgets.)
The long conversation flushed out several concerns and criticisms. In addition to those mentioned above, these included:
- Many, many references to the broken promise to State employees who have worked diligently, and made career choices, based on assumptions that they would qualify for the Retiree Health benefit.
- Concerns that passage of the Bill could create unforeseen costs to the State in the form of litigation, resulting from that broken promise. (One such case in Rhode Island is not yet resolved. Opponents promised similar litigation in Massachusetts to block the implementation of Bill 59.)
- Worries that the structure of the Bill's implementation creates several "cliffs." In other words, the milestones and cutoffs created in the bill would make it so that employees with similar demographics, who might have had very similar lengths of service, would experience very different retirement benefits, requiring some to retire early, requiring others to work several years longer than they had planned, and simply leaving others in the lurch with no coverage whatsoever.
- Concern that the provisions of the bill rely on the Affordable Care Act to offset some of the impacts, even though the Affordable Care Act hasn't yet been fully implemented, and faces obvious challenges of its own.
- A preference to directly address the issue of skyrocketing healthcare costs, and create actual savings, rather than shifting costs from the State on to its employees.
- The need to consider more progressive ways of addressing the liability, which are unfairly weighted against lower-wage earners and women, whose caregiving obligations can sometimes make it impossible to reach the new 30-year requirement created by the Bill.