March 14, 2012
As we search for savings to reduce our taxes and utility bills, I dare to point out the following facts.
Active public employee family health care plans:
MLGW-PPO plan 661 members @$18,646.32 per year total cost with MLGW paying 75% or $13,984.74 per year.
Memphis—basic plan- $11,769.60 per year total cost with the City paying 70% or $8,238.72 per year.
Difference is $5,746 per year per family. If the MLGW was brought back to the Memphis rate this would save the rate payers $3.8 million per year.
There are many other comparisons particularly in the various classifications such as single active employees, retirees under 65, retirees over 65 and special plans, some as high as $29,785 total annual cost at the MLGW.
However, the biggest area of potential savings are those retirees that are eligible (or their spouse is eligible) for Medicare. Here is where a bit of history is necessary.
In 1986, the Federal government passed the 1.45% tax on new employees for Medicare part B but those hired before 1986 were given the choice by the City not to participate. There were 581 Memphis employees in this group who chose not to participate and a number at the MLGW. Shelby County took a different path. Look at the results.
UNFUNDED OPEB LIABILITY
Memphis $1.3 billion dollars
MLGW $466 million dollars after putting in $79 million dollars for the last four years over and above the annual health care costs. This money came out of your utility bills.
Shelby County $261 million dollars
If the City of Memphis and the MLGW are looking for real savings, then this is the field to be plowed. I estimate that $10 to $15 million dollars per year could be saved by instituting the Shelby County retiree health care policy and rates at the City of Memphis and the MLGW and bringing the active employee MLGW health care rates in line with the City of Memphis rates, not 58% higher.