By Dave Palmer
The saga of Detroit’s bankruptcy and the apparent desire of bankruptcy attorney come Detroit emergency financial manager Kevin Orr to deprive retirees of security in their golden years continues, according to the September 12th edition of the Detroit Free Press.
The latest nonsensical plan is to replace health care benefits for retirees under 65 with a monthly stipend of $125. Those who are over 65 will be rolled onto Medicare, thus passing the cost of retiree health care from the City of Detroit on to the federal government. This seems to be an extension of Orr’s August insurance proposal that would increase the annual deductible for singles with no dependents from $200 to $750 annually, with total out-of-pocket expenses capped at $1,500. A family would see their deductible increase to $1,500 annually, with a cap on out-of-pocket expenses capped at $4,500, up from $3,000.
Never mind that the retirees agreed to deduct money from both their regular paychecks and their pension checks to pay for this health care. Never mind the fact that the retirees are in no way responsible for the bumbling of the finances supporting their health care plan. If Orr gets his dual paychecks as both city financial manager and as member of the bankruptcy firm that will no doubt handle Detroit’s bankruptcy, then everything is hunkey dorey in his world.
What sort of health plan will $125 buy? Before I added on to my spouse’s insurance plan, I paid $50 a month for health insurance that basically only covered 50% of the costs of emergency room procedures. No office calls or prescriptions were covered, and as far as dental and vision went, not even emergency procedures were covered. Pretty soon, that rate went up to $60 per month, then $80, then $100. I was 26 at the time I purchased this insurance.
Now, I’m not necessarily an expert in insurance costs, but based on what I do know about insurance, it seems rather unlikely that someone of retirement age will be able to get any sort of health insurance plan at the rate of $125 per month. Therefore, they will have to dip into their already limited funds in order to be able to afford health insurance. Of course, the state and the insurance companies are remaining mute on how much insurance plans offered on the health insurance exchange will cost starting October 1.
Another problem that retirees under 65 face is the fact that the Michigan legislature has decided not to vote for immediate implementation of Medicaid expansion, thus delaying it until April of next year. If Orr’s plan comes to fruition before then, then thousands of seniors whose pension adds up to more than 100% but less than 400% of the poverty level could be thrown into insurance limbo. Compounding this problem is the fact that the enrollment period ends about a month before Medicaid expansion is scheduled to take effect, leaving them in limbo until next October.
Detroit’s bankruptcy is the largest municipal bankruptcy in the history of the country, and any decision handed down will no doubt serve as precedent for future municipal bankruptcies. That is why Orr’s plan cannot be allowed to proceed.
If Detroit is allowed to cut pensions and sever healthcare benefits based on a bankruptcy proceeding, then it will not be long until other municipalities and possibly even private companies will take to declaring bankruptcy in order to avoid making good on their contractual pension and healthcare promises.
From there, it will be a few short steps to invalidating other contractual obligations through claims of bankruptcy, such as union work agreements, non-union work agreements, and virtually anything else that can be sealed through a written contract.
It it through proccesses like these that the top 1% have accumulated 95% of financial gains in the recovery since the Great Recession. This trend will continue unless we all call our Representatives and Senators in the Michigan Legislature and tell them to protect the workers and the retirees. Tell them that you as a constituent will not stand for allowing big banks to subsidize their stock market gambling schemes with taxpayer dollars, pension funds, or healthcare dollars. Don’t allow Detroit’s bankruptcy to be a model for bailing out banksters who make bad business decisions.