LANSING, Mich. — Friday, Lansing Mayor Any Schor announced major changes to the health care coverage for retired City of Lansing employees. The change was made with the intention of saving the city $8 million annually, though it has been met with mixed reactions.
The changes would effect the health care plans for more than 1,330 retired city workers, and would take effect beginning Jan. 1. Notably, during a time when America is still anticipating the challenges of dealing with COVID-19.
Although changing healthcare is never a popular move, officials are saying the cuts are part of dealing with an oncoming crisis of legacy costs. It is estimated that more than $730 million in unfunded pension payments and health care payments will need to be paid over the next decades.
In a press release the City of Lansing said that between $80 million and $100 million of those costs could be alleviated by the health care changes.
“One of the biggest financial challenges that our city faces, along with many others across the country, is the unfunded financial liability related to retiree healthcare and pension obligations,” said Mayor Andy Schor. “While my administration and our employees have taken steps through collective bargaining to lessen the obligations in the future, the City must also address immediate needs.”
He continued, “The Financial Health Team and Chief Strategy Officer Judy Kehler have researched and provided several recommendations on how Lansing can reduce unfunded legacy costs, which are some of the highest in the state. It is my priority to ensure the financial security of our city so we can afford the services residents need and fulfill the pension commitments made to retirees and future retirees. Adjusting retiree benefits to match current employee benefits, like making generic copays $10 and doctor visits $30, while providing a hardship fund for those that can’t afford the small copay increases, will save the City of Lansing $8 million per year while still ensuring that retirees have these medical benefits and keeping our promise.”
Retirees under 65 will continue receiving plans through Blue Cross Blue Shield of Michigan or PHP.
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