Columbus Dispatch: Health-care costs put safety forces in a bind

State pension funds
Health-care costs put safety forces in a bind
Tuesday, April 10, 2007
By Suzanne Hoholik

THE COLUMBUS DISPATCH

By the numbers

Key figures for the Ohio Police and Fire Pension Fund

$11.9 billion Portfolio with an investment return of 16 percent in 2006

52,343 Active and retired members

$2,689 Average monthly retiree payout

$2,463 Average monthly disability payout

$193 million Budgeted for health care for 2007

27,088 Retirees, spouses and dependents covered by pension health plan

Source: Ohio Police and Fire Pension Fund

When Jim Smith's monthly health-insurance premiums increased more than $200 this year, he decided to gamble with his wife's health.

Marsha Smith is in pretty good health at 64, he said, so he dropped her from the Ohio Police and Fire Pension Fund and bought a high-deductible health policy for her.

It's not the same coverage, there's a $1,500 deductible and $3,000 out-of-pocket expenses, but the premiums are affordable at $283 a month, he said.

In all, the couple is saving $157 a month.

"I realized the risk I was taking, but it wasn't worth paying them," said Smith, 68, who retired from the Columbus Division of Fire in 1991.

Escalating health-care and insurance costs are causing problems for many Americans. Premiums have increased about 87 percent since 2000, and employers are shifting more health-care costs to workers or dropping insurance plans altogether.

State pension funds are not immune.

"I never thought I'd hear this, but I've had members tell me that they're making decisions on, 'Do I eat or do I buy medication?' " said Gary Siniff, president of the Central Ohio Retired Firefighters.

Despite growth in investments, retirees in the fund are picking up about one-third of their health-care costs.

Premiums average about $198 a month for a retiree under age 65 and $430 for a spouse.

As a result, many have dropped spouses from the plan, joined their working spouse's health policy or taken jobs to pay for premiums.

The pension's health fund covers 1,566 fewer people, 418 of them retirees, this year than in 2006.

Siniff, 64, who retired from the Franklin Township Fire Department in 1994, said he left the pension's health plan and signed up on his working wife's policy.

William Estabrook, the fund's executive director, called health-care costs a "budget-buster."

"It doesn't take much for a couple of bypass surgeries and cancer treatments to skyrocket" costs, he said.

The fund has $193 million budgeted this year to cover health care for 27,000 people. That's up from $163 million in 2005.

The fund pays 75 percent of premiums for retirees. It pays 25 percent for spouses and dependents. It used to pay 50 percent.

There are also higher co-pays, co-insurance and deductibles. And next year, retirees might have to use mail-order prescriptions.

"We know we're expensive," Estabrook said.

Other state pension funds, including those for teachers and school employees, also struggle with premiums.

None of the state's five pension funds are required to provide health insurance, but they do, said state Rep. Larry L. Flowers.

He said employees and local governments might have to contribute more to pension funds to offset health-care costs.

Flowers, a Republican and retired Madison Township fire chief, said it also might be time to consider raising the retirement age for members of safety forces.

Since 1988, firefighters and police officers with 25 years of service have been able to retire at 48.

That leaves 17 years before they're eligible for Medicare.

Jack Reall, president of International Association of Fire Fighters Local 67, said he'd fight raising the retirement age. Instead, he suggested that municipalities contribute the same amount of money to pension funds for police officers as for firefighters.

Right now, cities and townships contribute 24 percent of a firefighter's paycheck and 19.5 percent for officers.

State Rep. Dan Stewart said both ideas are tweaks to pension funds suffering from a national health-care crisis.

"We can only fix with Band-Aids for so long," the Columbus Democrat said.

shoholik@dispatch.com