Plan to eliminate retiree subsidies backed

Tuesday, April 12, 2005 | 11:03 a.m.

CARSON CITY -- Local government, school districts and private industry lined up behind Gov. Kenny Guinn on Monday, supporting his plan to eliminate health insurance subsidies to those who retire in the future.

Michael Hillerby, chief of staff to Guinn, told the Senate Finance Committee that this would save $500 million over a 30-year period. Senate Bill 484 provides that a state worker hired after July 1, 2006, would not receive a state subsidy to pay for health insurance when he or she retired.

Local governments asked the committee to include them in the bill as well.

Hillerby said the state is now paying an average of $316 per month per retired employee. The subsidy can range up to $1,100, depending on the health plan the retired worker is enrolled in.

But there was opposition from some employee and retiree groups. James Richardson, representing the Nevada Faculty Alliance of teachers in the university system, said he had "serious reservations" about the Guinn plan. He said the health insurance subsidy is now used as a way to entice faculty to come to Nevada.

Richardson said this was a "major policy change" and he said there should be some alternatives proposed to soften the blow.

Ron Dreher, representing the Peace Officers Research Association of Nevada, said the measure would have a "drastic impact" on those who retire and need health insurance. He said the average pension from the Public Employees Retirement System was $25,000 and health insurance would cost that person about $6,000 a year.

"Most employees cannot afford that cost," he said.

But Hillerby said all present employees would still retain the subsidy. It would affect only those hired after July 2006. Those hired after that date would still have the option of continuing under the state insurance program but they would have to pay the premiums.

Hillerby also noted the state is now paying the premiums for the government employees' Medicare program. So those workers, when they retire would be eligible for that program when they reached the eligible age.

Sen. Bob Coffin, D-Las Vegas, said "more thinking" should be done before passing Senate Bill 484.

"I will not support this move until there are more alternatives," he said.

Senate Minority Leader Dina Titus, D-Las Vegas, said eliminating the subsidy would create another group of uninsured persons. She said they would have to look for other government programs to help them with their medical care. And so it would "cost all of us."

The committee must vote on the bill before Friday, if it is to survive.

The bill gained the support of the Las Vegas Chamber of Commerce, the Nevada Taxpayers Association, Clark County, the Nevada Association of Counties and the school districts of Clark and Washoe counties.

There were amendments proposed that would allow the local governments to follow the state's lead.

Two years ago, the Legislature passed a bill that required local governments to pay a subsidy to their retired employees who joined the state's health insurance plan.

Dan Musgrove, representing Clark County, said that bill cost the county $100,000 last year and will carry a $300,000 price tag next year. He said there are workers who leave Clark County, go into private industry, and then retire. Yet Clark County has to pay the health insurance subsidy for them, he said.

Musgrove also told the committee that county employees have never asked for the retiree health benefits. He said the employees, when negotiating their contracts, want the "benefits on the front end."

Hillerby said Guinn's plan would not create another group of uninsured. These workers who join the government after June 2006, would still be covered by Medicare and would have the ability to stay in the state plan, as long as they paid the premiums.

Witnesses testified that governments elsewhere and private business have eliminated or are eliminating this kind of costly benefit.

Martin Bibb, representing the 8,400 Retired Public Employees of Nevada, said the Guinn proposal was "premature" and needs a great deal of study.