Trim retiree health care benefits for state workers and they will flee? What a joke. The only people leaving jobs right now are those losing them. But that is what Sue Esty, legislative director for the American Federation of State, County and Municipal Employees, says will happen if employees are asked to contribute more for their care.
“The stream of people leaving state government could easily become a flood,” she said. Who is she, Maryland’s version of John Thain? The former Merrill Lynch chief executive officer told CNBC’s Maria Bartiromo, “If you don’t pay your best people, you will destroy your franchise,” in response to a question about why he gave $4 billion in bonuses to employees days before his firm merged with Bank of America and after that bank had asked for taxpayer money.
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Did someone forget to tell Esty the good times are over? Or is her sense of entitlement so strong reality can’t seep in?
We simply cannot afford to pay for retiree health benefits more generous than any of the other nine AAA bond-rated states and way more generous than benefits provided by private-sector employers. The numbers are clear. The state contributes $314 million in the budget to pay for retiree insurance, but it needs another $500 million to fully fund current plans.
A big reason for this is because so many workers — about one quarter — retire at 55 and younger. Current benefits let those as young as 50 years old with 15 years with the state retire with a smaller pension but full health insurance for them and their spouses. Those benefits include low co-pays and no deductibles.
Those terms are beyond generous, especially at a time when so few people receive either retiree health care or pensions in the private sector. And let’s not forget that state workers make more on average than other workers in Maryland.
A state commission that studied Maryland’s benefits recommends raising the percentage retirees must pay for health insurance and changing prescription drug benefits to encourage people to manage their drug costs. Right now the state picks up everything over $700, so there is no reason for retirees to watch how they spend on prescriptions. These are sound proposals — not “shocking” or “disastrous” as noted by AFSCME’s Esty.
Aligning benefits with the state budget is not a conservative or a liberal idea. It is sound policy. Legislators should tackle it this year while tight finances give them no choice but to cut. Generations of Marylanders to come will thank them for it.
