The effects of the bankruptcy in Detroit will be felt by nearly 30,000 current and retired municipal workers as the city’s emergency financial manager announced dramatic cuts in employees’ health insurance plans.
The cuts were announced by Kevyn Orr, who was appointed earlier this year by Michigan’s governor to oversee the finances of the struggling city. Orr said that the reductions will take effect January 1 and that they are aimed at improving the finances of Detroit, which filed for bankruptcy in July.
The city has sent letters to roughly 8,000 retirees under age 65 that Detroit is reducing their city-paid retiree health insurance coverage by $605 a month, about $1,834 for families. Instead, it will give them a monthly $125 payment to use toward aq private plan on the federal health insurance marketplace exchanges.
The new guidelines will affect more than 10,500 retirees, who will be offered a Medicare plan with premiums provided by the city. However, these retirees will now be responsible for paying their own deductibles.
The 10,000 current city employees will see their deductibles increase drastically, from the current $200 a year to $750. Employees with families on the city’s insurance plans will see their costs increase from $3,000 to $4,500 a year.
The changes have produced strong disapproval from a number of elected officials, community activists and others.
“This is one of the fears of bankruptcy that’s come to pass,” said David A. Bullock, the pastor of the Greater St. Matthew Baptist Church and head of Change Agent Consortium, a civil rights organization in Detroit.
“Kevyn Orr is cutting dollars drastically and, for people in our community on fixed incomes, this is a major hit,” Bullock said, in an interview with BET.com. “These cuts present many of them with the choice of getting all of their medication or some of it.”
Bullock criticized Orr and his staff for not working harder to determine ways of collecting revenue for the city rather than reducing medical benefits for workers and retirees.
“They were paying $62 million for consultants,” Bullock said. “There are dollars out there. If there were a better plan to collect revenues more aggressively, there might be less of a need to shift the burden on the most vulnerable citizens of Detroit.”
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(Photo: Bill Pugliano/Getty Images)