BOSTON (AP) — Lawmakers are reviewing Gov. Deval Patrick’s proposal to rein in health care costs for retired public employees by raising the retirement age and service requirements and reducing what the state pays for many workers’ premiums.
Supporters and critics crowded the Statehouse Thursday as the Legislature’s Public Service committee heard testimony on a bill the administration projects would save up to $20 billion over the next 30 years.
The bill would increase from 10 years to 20 years the minimum service requirement before an employee can be eligible for retiree health care benefits. The measure would also raise the eligibility age for retiree health benefits from 55 to 60 and would reduce the state’s contribution to health care premiums for many workers.
The measure would not affect workers who are already retired.
Secretary of Administration and Finance Glen Shor said that changes are essential to keep benefits sustainable for future state and municipal workers. Massachusetts has among the nation’s highest retiree health care costs, he said.
Shor pointed to a recent report by the business-backed Massachusetts Taxpayers Foundation that estimated the combined unfunded liability for retiree health benefits for workers at the state and local level at about $46 billion.
That’s a result of the growth in health care costs, an aging workforce and increases in life expectancy, Shor said.
“There is an urgent need to take action on this issue now,” Shor said. “Each year that we continue funding retiree health care benefits at the current level, our unfunded liability increases.”
If changes aren’t made, he said, government will have to cut back on other services to meet the demands of retiree health care. He said the amount of money it would take to adequately cover current liabilities would eat up nearly all the local aid cities and towns receive each year, leaving almost nothing for other needs.
Susan Tousignant, president of the Service Employees International Union Local 509, said the proposal goes too far. The union represents 17,000 human service and mental health workers in Massachusetts including 7,500 public employees.
Tousignant said the bill would have a disproportionate effect on lower wage workers and could harm workers who get into public service later in life by making it harder for them to obtain retirement benefits.
“The bill fails to offer any real cost-saving measures other than a spike in out-of-pocket expenses for seniors,” she said. “The responsibility falls on future retirees and them alone.”
She also said the changes would penalize workers who must take a leave of absence for the birth of a child or death of a loved one.
The bill doesn’t go far enough, according to Michael Widmer, president of the taxpayers foundation.
Widmer pointed to an exemption for teachers that would increase their retirement age by only two years, making them eligible for full benefits as early as age 57.
But he said the biggest problem with the measure is that it would prohibit cities and towns from changing their level of premium contributions after an employee’s retirement, which he called “a major step backward.”