June 23, 2024

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Hall-Long outlines recommendations on state retiree healthcare, fiscal sustainability | State

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Lt. Gov. Bethany Hall-Long on Monday, Feb. 19, outlined what was described as “an actionable roadmap to protect state retirees’ healthcare and promote fiscal sustainability” during a joint House and Senate Health Committee hearing.

Meeting before the House Health & Human Development Committee and Senate Health & Social Services Committee, Hall-Long — chair of the Retiree Healthcare Benefits Advisory Subcommittee — shared findings and recommendations from the subcommittee’s inaugural report analyzing retiree healthcare benefits and long-term funding sustainability.

The General Assembly established the subcommittee in 2023 in response to concerns about retiree healthcare benefits for current and retired state workers and how to address a growing unfunded liability for those benefits. State Sen. Bryan Townsend and state Rep. Paul Baumbach serve as vice-chairs.

“The retiree subcommittee brought a wide variety of stakeholders to the table including members of the General Assembly, retirees, union leaders and cabinet members. We established an unprecedented public process, creating a website to better inform residents, and taking public testimony at every step to make sure everyone was heard,” said Hall-Long.

“I want our retirees to know that their voices matter. Because of you, we were able to put together a robust suite of recommendations that are designed to strike a balance, protecting healthcare benefits for current retirees — including removing Medicare Advantage from consideration — and addressing long-term sustainability so we can provide the best healthcare system for current and future workers.

“We have a window of opportunity to act, and it requires everyone to take bold steps now to meet this moment and protect and preserve the best healthcare not only for our retirees, but for future generations. I stand ready to work with everyone to turn this report and these recommendations into action.”

“I want to commend the RHBAS, led by Lt. Gov. Hall-Long, for their hard work in compiling such a thoughtful and detailed report on an issue that is top of mind for many of our constituents,” said state Rep. Kerri Evelyn Harris, chair of the House Health & Human Development Committee. “Our state retirees have earned and deserve quality healthcare benefits and the recommendations put forward by the subcommittee will help guide us in making decisions that prioritize the well-being of our retirees and our state as a whole.”

“I want to thank the members of the Retiree Healthcare Benefits Advisory Subcommittee for all of their hard work in developing a strong set of recommendations for how the State of Delaware can maintain a robust and affordable retiree healthcare plan for years to come,” said state Sen. Sarah McBride, chair of the Senate Health & Social Services Committee. “My hope is that the State Employee Benefits Committee and the General Assembly will now use this roadmap laid out by the RHBAS to help ensure that current and future retirees receive the world-class healthcare services they deserve.”

The subcommittee fostered an unprecedented public process, meeting 20 times over the course of nine months and collecting 10 hours of public testimony. Members reviewed other states’ Medicare supplemental coverage, individual marketplace and Medicare plans, funding options, and actuarial and financial data.

The group’s report, published in December 2023, addressed several aspects of retiree healthcare, including strategies to address the Other Post-Employment Benefits (OPEB) Fund liability and recommended changes to the process by which the State selects state retiree healthcare plans. The estimated liability for retiree health care benefits is currently $8.9 billion, of which $8.4 billion is unfunded. The net unfunded liability is expected to grow to $20.7 billion by 2042.

Subcommittee recommendations include:

• The State should neither request nor consider a Medicare Advantage plan going forward.

• Continue contributing 1 percent of general fund from the prior year to the OPEB fund.

• Increase OPEB pre-funding from 0.36 percent of payroll to 0.5 percent, then increase by an additional 0.25 percent of payroll each fiscal year until it reaches 10 percent.

• Ensure that current Medicare-eligible and pre-Medicare state retirees and state employees who retire prior to Jan. 1, 2025, will be entitled to Special Medicfill/Rx benefits with no changes to the state share percentage of payments when they are Medicare-eligible.

• Limit changes to plan design, eligibility requirements, or contribution share/percentage to workers hired on or after Jan. 1, 2025.

• Solicit public comment before the SEBC holds a public vote to adopt the final request for proposal (RFP) for retiree healthcare plans.

• Research and measure the cost of state-sponsored healthcare benefits for three subgroups: current workers, eligible pensioners who are ineligible for Medicare, and eligible pensioners who are eligible for Medicare.

• Address the issue of healthcare pricing in Delaware, including statutory, regulatory and administrative changes in 2024 to bring more transparency, consistency, affordability, and sustainability to healthcare prices and price growth.

The subcommittee also recommended modifying the State’s calculation for the portion of the state share for healthcare that the State pays for retirees. The percentage is based on the number of years of service for each retiree. The full list of recommendations and additional details can be found in the full subcommittee report.

The RHBAS will continue to meet this year to further discuss the issue of retiree healthcare benefits and explore solutions.

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