Detroit considers Obamacare for some retirees

The city wants to replace current health care benefits for some former workers with a stipend to help them buy insurance under the Affordable Care Act.

By Bruce Kennedy Sep 13, 2013 3:12PM

Detroit Emergency Manager Kevyn Orr (© Rebecca Cook/Reuters)Two major economic stories are coming together this week in the Motor City.

In July, Detroit became the largest U.S. city in history to declare bankruptcy. Now, officials may be looking at Obamacare to help ease the financial pressure.

Detroit emergency manager Kevyn Orr (pictured) is considering a plan to replace existing health care benefits for city retirees under age 65 with a small stipend that would help them buy insurance under the federal Affordable Care Act.

Detroit is struggling to pare down its more than $18 billion in debt. Lamont Satchel, the city's labor relations director, told The Detroit Free Press the proposed deal would cut the city's health care costs for retirees from $170 million to $50 million or less annually.

Along with the financial pressures, there's a time element to this controversy. Enrollment in the so-called marketplaces for the health care plans begins Oct. 1 -- with coverage scheduled to start Jan. 1.

"This is absolutely crucial to getting (Detroit's financial situation) figured out," Orr's spokesman, Bill Nowling, told Reuters. "What's even more important is we have to get an agreement and move forward on a plan because retirees are going to have to start making decisions about what provider they want to seek out."

But some of those potentially affected by the proposed deal think it would just lead to more individual payments for health care coverage.

"It would buy nothing. It would buy absolutely nothing," John Day, a 52-year-old retired police detective, said in an interview with The Free Press. "The whole thing is, I don’t know -- it's appalling."

Day's current city health care plan also covers vision and dental -- and his insurance premium gets deducted from his pension check.

Brian O'Keefe, an attorney who represents the city's two retirement associations, says about half of Detroit's 21,000 or so city retirees and their beneficiaries are under 65 -- and the suggested stipend of about $125 a month "would be a relatively small percentage of what is currently being paid in health care benefits."

And the healthcare issue has also become a political issue. One of the organizations representing retired Detroit city employees is endorsing former Detroit Medical Center chief executive and mayoral candidate Mike Duggan in the upcoming elections, in part for his defense of the retirees' current healthcare plans.

"When it comes to pensions, I've said this over and over: The pensions were earned by employees for years of service," Duggan was quoted as saying by Michigan Public Radio. "They are sacrosanct. They ought not to be tampered with. And I'm going to be fighting every day to make sure that doesn't happen."

More on moneyNOW

Sep 13, 2013 4:08PM
So, just to be clear, retired DETROIT CITY EMPLOYEE UNION members AREN'T happy that they are being forced onto OBAMACARE?


Sep 13, 2013 4:33PM
A bunch of whiners getting what they voted for.
Sep 13, 2013 3:38PM
Largest city to go bankrupt. Not the last.  The beginning of REALITY is starting to take hold.  JUST LIKE ANYONE, if you spend more than you take in you go broke. PERIOD.
Sep 13, 2013 3:32PM
Obamacare is a Democrat Train Wreck.   Make sure every democrat, union member and Obama supporter is on the train!   Make sure when the train wreck happens, the democrats enjoy the financial carnage they have wrought.

All aboard!   
Sep 14, 2013 3:39PM
That's one desperate city. Why not do them a real favor, and just cancel their insurance all together?
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