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Hartford Reverses Course On Retiree Health Premiums

By JEFFREY B. COHEN | Courant Staff Writer

August 16, 2008

Months after announcing an unpopular plan to save millions of dollars by hiking the cost of health benefits for city and school retirees, the city has reversed its course.

That does not mean rates won't go up. On the contrary, city officials said Friday that rates for city employees probably will increase to offset the rising cost of health care. But the increases won't be nearly as high as originally projected, officials said.

After several interview requests Friday, a spokeswoman for Mayor Eddie A. Perez eventually said the mayor was unavailable. In a press release, Perez said that the new rates for city — not school — retirees "are fair to the retirees and to the taxpayers of the city."

City retiree and former union chief Alex Trujillo said the city must have seen the error of its ways.

"They tried to change the methodology and it didn't work in their favor because of the uproar of the retirees and the overwhelming increases the retirees couldn't afford," Trujillo said. "Retirees put them on notice. They had to go back to the way that they [normally] do business."

The idea to save money by charging city and school retirees and their family members more for their health insurance was an unpopular move when it was announced this spring. Since then, retirees have complained that they've gotten bad information, not enough information or no information. The city conceded that the plan had not gone smoothly.

That plan would have affected more than 4,400 people. Retirees over 65 and their dependents were given a choice: stay with their current Anthem health plan and pay higher rates or switch to a private Aetna-administered, Medicare-affiliated program that has lower premiums than the new Anthem plan, but potentially higher prescription drug costs.

Those not yet eligible for Medicare had no option but to stick with the Anthem plan and pay the higher costs.

But faced with a good deal of public outcry and pressure from the city council, Perez put a moratorium on the higher insurance rates until Sept. 1. He took the responsibility for the plan out of the hands of the city's finance department and put it in the control of its personnel staff.

On Friday, Perez and his staff said that the city has ditched the original plan, scratched its agreement with Aetna and gone back to the old way of doing things. That means charging premiums according to rates set by collective bargaining agreements that were in place when the employees retired, said Santiago Malave, the city's director of human resources.

"This is basically implementing what's been in place all along," Malave said.

Retirees will soon receive letters from the city outlining their choices. The new rates will be in place in September in order to cover retirees come October, Perez said. The changes in the health insurance benefits mean that the city will now have $600,000 less than it originally planned for, Perez said.

The changes Perez announced Friday do not affect certain school retirees. Perez said the school system will get in touch with those employees separately. School administrator Freeman Burr said that although the school system plans to follow the same methodology as the city, the final details have yet to be worked out.

City council Minority Leader Larry Deutsch was not enthusiastic about Perez's announcement.

"I don't have the data to see if it's a well-taken decision or not," said Deutsch, pointing out that the city council passed a resolution earlier this summer instructing Perez to come back before the council with a new plan. That hasn't happened.

"The bottom line is we don't have the information to judge, and we haven't had direct communication from the administration as to their rationale," Deutsch said. "And we eagerly seek it."