FLASHBACK -- 3 years ago and it's contract renewal time again -- will transparency demands be included this time 'round?

Medicare changes could save STRS, members millions
By PAUL E. KOSTYU Copley Columbus Bureau chief
March 19, 2004

COLUMBUS — Changes in the federal Medicare program could save the State Teachers Retirement System and its members tens of millions of dollars.

Jim McCready, a consultant with Mellon, reviewed six possible scenarios with the retirement system board Thursday as it tries to design a prescription drug program for 2006 when the Medicare changes go into effect. The plans apply to the 53,000 members who are 65 and older.

The proposals would save the retirement system from $16 million to $54 million annually, but not all would help out retirees with their prescription drug costs.

“Why would we consider any scenario that would increase the retirees’ cost?” said board member Jack Chapman.

Three of the proposals would either keep the retiree contribution at its current 53 percent rate or raise it, costing them $2 million to $7 million.

“We have to make sure we’re fully informed,” said Deborah Scott, who chairs the board’s Health Committee.

The board is not expected to make a decision anytime soon, but wants to be prepared to do so once the federal government finalizes the rules for prescription drug coverage under Medicare.

The plan that seemed to be most attractive to board members was one that would save the retirement system $35 million annually and retirees $19 million by lowering their contributions for drugs. The plan also would extend the life of the retirement system’s Health Stabilization Fund by three years.

It would eliminate the prescription drug benefit but replace it with an annual $1,000 Health Reimbursement Account, which would allow flexibility in how the money is spent.

Board Chairman Eugene Norris said the board needs to move cautiously. “It sounds good,” he said. “But what the federal government giveth, it taketh away.”

Chapman agreed. “We have to have more than an expectation of having money in the bank.”

Also, the committee approved allowing Executive Director Damon Asbury to negotiate a new three-year contract with AdvancePCS Health as the retirement system’s pharmacy benefit manager.

Asbury said he hopes to cut a better financial deal with the company. He also wants the company to allow the retirement system to get out of the contract without penalty should the prescription drug landscape change.

You can reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail: paul.kostyu@cantonrep.com