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Analysis: While the city of San Diego’s pension plan often gets top billing, it’s also stuck with another billion-dollar deficit: its promise to provide health care for retirees.
The city and its employee unions have been negotiating for two years to trim its retiree health care costs, and a resolution is expected soon.
How far the city goes to reduce the benefit could have far reaching effects beyond the city’s bottom line. A common objection to wiping away the benefit entirely is city workers’ Medicare eligibility. If they don’t have Medicare and their city benefits go away, they’d be stuck without health care altogether.
Councilman Carl DeMaio contended during a radio interview with Chip Franklin that workers indeed have access to Medicare, federally subsidized health insurance for those older than 65.
But not every city employee does. As we reported last week, up to 1,305 current employees aren’t eligible for Medicare through their city employment. That number is 14.5 percent of its full-time workforce.
In 1981, general city workers voted out the Medicare system. Five years later, the federal government required all employers to participate in Medicare. All city workers hired after 1986 receive Medicare coverage through the city.
These decisions have created a Medicare gap. Because of the program’s eligibility requirements, city workers hired between 1972 and 1986 — the 1,305 employees — do not qualify through their city employment. If city-paid retiree health care goes away, those workers could be at risk. (For a variety of reasons, it’s unknowable how many employees actually won’t receive Medicare.)
In response to our questions, DeMaio spokesman Jeff Powell said in an email that the “vast majority” of city employees will have access to Medicare. Contending that city employees are Medicare eligible, he said, is “a safe generalization.”
Both these points are valid. But they’re belied by the fact that DeMaio specifically addressed the gap on the radio. Here’s the councilman’s full statement:
Right now under the city of San Diego, we provide every employee with Medicare. We all pay into Medicare. So this nonsense that the labor unions say that well we don’t get Medicare, that’s baloney. What they say is well the city left Medicare in 1981. But what they don’t tell you is that we went right back into it in 1983. So city employees are Medicare-eligible.
DeMaio got the dates wrong, but that isn’t our concern. Instead, our issue is that he is acknowledging the city left and re-entered the Medicare system, but doesn’t say that the gap matters for employees’ Medicare access. It does. DeMaio’s statement ignores the 14.5 percent of the workforce that doesn’t qualify for Medicare through their city employment.
This point is especially relevant because of the ongoing health care talks. A spokeswoman for Mayor Jerry Sanders and a labor official both have said employees’ Medicare eligibility is a factor in the negotiations.
It’s worth noting that DeMaio believes city employees who aren’t Medicare eligible should receive city coverage. He said all of his retiree health care reform proposals have included that provision.
“If a city employee is not Medicare eligible, I have no problem providing a reasonable health insurance allowance,” DeMaio said in an interview. “I have always had that position and I have factored that into all our retiree health care reform proposals.”
Still, he didn’t say that in the radio interview, nor does he make that distinction in his formal budget plan.
We’re calling DeMaio’s comment False because all city employees do not qualify for Medicare through their time with the city. Further, the councilman’s statement implied that the city’s exiting the Medicare system didn’t affect employee access.
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