Lansing mayor kills plans to gut retiree healthcare benefits

WEDNESDAY, Dec. 23 — Lansing Mayor Andy Schor is reeling back on his plans to adjust healthcare benefits for about 1,300 retirees, announcing a new plan today that reportedly won’t result in “long-term cost increases” while also still saving the city about $3.5 million annually.

“I have listened to the comments and concerns that our retirees and unions have raised regarding their healthcare benefits moving forward and agreed to a plan that will allow the city to save money without retirees incurring additional costs next year,” Schor said in a press release.

In an effort to reduce the city’s ballooning unfunded legacy costs, Schor this year announced that about 1,300 employees — including those formerly represented by Teamsters and the UAW — would have their benefits modified to more closely mirror those of current employees.

The changes were slated to take effect on Jan. 1 and for many retirees, would’ve resulted in additional out-of-pocket expenses from higher copays for office visits and prescription drugs — as well as a 20% coverage reduction for certain medical services, including chemotherapy.

Hundreds of retirees have pushed back against the changes in recent weeks, extending City Council meetings past midnight with public comment after public comment. At least three in-person protests were also organized, including at least two across from Schor’s home.

Union leaders also filed a grievance this month that argued the changes were illegal, essentially claiming the mayor couldn’t unilaterally tinker with benefits that were supposed to last a lifetime.

Schor’s latest plan was the result of continued conversations with union leaders and retirees, he said. It now calls for pre-Medicare employees under the age of 65 to maintain their current level of coverage with either Blue Cross Blue Shield of Michigan or Physicians Health Plan. Medicare retirees over 65 will migrate to a Humana Medicare Advantage plan, which will reportedly not result in any “long-term cost increases” and still somehow net a cost savings of $3.5 million.

City officials, including the mayor, were not available today to explain the full scope of the latest healthcare changes. A spokeswoman for Schor’s office said retirees over the age of 65 may initially incur extra costs, but those would be covered by the city. Exactly how remains unclear.

The prior plan would have netted a much larger savings of $8 million annually, which city officials had billed as necessary to battle against unfunded pension and retiree healthcare liabilities that have skyrocketed to nearly $737 million in recent years. Schor, in defending the changes, told City Pulse that something needed to be done to avoid a looming financial “crisis.”

Schor still billed it as one of the city’s “biggest financial challenges” in a statement sent today.

“This will continue to be a complex challenge for many years to come, as we must take action to ensure the financial stability of the city in order to provide services for residents, while still providing pension and healthcare to those who have served the city,” Schor said in a statement.

Chief Strategy Officer Judy Kehler reportedly worked with consultant Manquen Vance, the City Council, union representatives, retirees and other city employees to formulate the latest “mutual resolution.” A press release also states that unions fully support the latest series of changes.

Retirees will receive a letter in the mail with additional information. Those with questions regarding post-65 Medicare coverage can call AmWINS Groups Inc. at 866- 286-5154. Retirees with questions regarding pre-65 coverage can call Health Advocate at 866-695-8622.

Check back for more details as they become available.