SANTA FE — The state’s underfunded health care system for government retirees will earn a prominent spot in any special legislative session this year, Gov. Bill Richardson said Wednesday.
"It’s going to play a big role," Richardson said during a late morning press conference at the state Capitol. "Absolutely."
Richardson’s administration and state lawmakers both have noted the financial troubles roiling the New Mexico Retiree Health Care Authority, an obscure state agency that covers 42,000 retirees, spouses and their children.
The retirees come from all state agencies, 19 counties, 22 cities, including Albuquerque, and several educational institutions, according to
its website.
Retiree health care "has to be a part of the discussion," Sen. John Arthur Smith, D-Deming, said earlier this week.
How exactly retiree health care will figure into a special session was unclear Wednesday. His administration will sit down with state lawmakers at month’s end to start negotiating over what would be taken up at the special session.
Richardson unsuccessfully tried to pass health care reform during the 2008 legislative session with a plan that relied largely on insurance industry reform. But his bill got caught in a crossfire between liberal lawmakers who advocated a single-payer system and more conservative lawmakers who worried about what the state could afford.
It didn’t help that many state lawmakers said they did not know the true cost of the reform.
Until recently, the retiree health care authority appeared financially stable, but in the last year a new actuarial report has diagnosed large problems that are causing increasing alarm among state officials and lawmakers. A
story posted earlier today on the Independent detailed the looming financial crunch.
Most notably, the authority has a $4 billion gap between what it owes in current and future retirees’ health care costs and what it has on hand financially.
Without drastic changes, the report said, the authority could go insolvent by 2014.
Because of its financial problems, the authority will raise premiums effective July 1 for certain retirees. Among those affected will be more than 9,000 former firefighters, police officers and other government retirees who retired early, as well as their spouses, who will see the biggest jump in price. The increases will amount to roughly $1,300 a year, or $112 a month, for the retiree. For the spouse the jump in premium will be even higher — $139 a month, or more than $1,600 a year extra.
Those retirees feeling the brunt of the premium increases are 65 and under and are enrolled in the gold-plated plan offered by the New Mexico Retiree Health Care Authority, the state’s main provider of health insurance to public sector.
Another 5,000 retirees, spouses and children enrolled in the authority’s silver-plated plan will get hit with smaller premium increases, according to documents.
In an ideal world, the authority would have enough revenue to pay operational expenses, as well as current retirees’ costs and to set aside money for future retiree costs.
But in recent years the authority has dipped into its investment portfolio to pay for current retirees’ health care costs, a practice that is frowned upon, government officials said.
