Bob Buerkle to STRS Board: Offer STRS Retirees a new "Tax Free" Health Care Benefit

Bob Buerkle's speech to STRS 

June 20, 2019

The STRS HC Contingency Fund is now 178% funded, enough to take care of all retirees for the next 60-65 years. How could that be you ask, when less than a decade ago the fund was expected to run dry in 10-12 years? Well here's how! Members used to be able to retire after 30 years at any age, which was generally around 55 or so. This is no longer the case since HC obligations continue to shrink as we are getting closer and closer to the future requirement of an age 60 retirement. In the past STRS was on the hook for many more years of HC expenses before the average retiree reached Medicare age (about 50% more), when STRS begins to receive substantial government subsidies (between $9,000 and $10,000 per person).

Proof of this can be found in STRS documents such as the 2018 Annual Comprehensive Financial Report. In the last few years, even without any Employer contributions, the HC fund has grown from $3.2 billion to $3.7 billion. This $500 million dollar increase cannot be redirected back into the pension fund to pay for benefits like our COLA, even though it originated as an Employer Deferred Compensation Pension Contribution! $3.7 billion is 25 times as much as a 2% COLA would cost for just one year.

There are ways that our Health Care funds could be better used for the benefit of our retirees. STRS could issue a HC Debit Card that could be used to pay for HC supplies, co-pays, medications, etc. Also, unlike the Medicare Part B supplement of $29.90 a month ($358.80/year) which is taxable, the amounts issued on HC Debit cards would be TAX FREE. A number of Medicare Advantage Plans available to the general public already offer this TAX FREE benefit with their plans, and to my knowledge, they have never received one penny of our employer payroll contributions. A $500 HC Debit card would cost about $75 million dollars a year, or only about 2% of our HC reserves. The STRS HC reserves have been growing by over twice that amount annually over the past few years!

Is this something that STRS Retirees deserve? In this "ERA of Broken STRS Pension Promises", I think it is! Here, look at this STRS document. In this document and in the 1974 Annual Report and under the direction of a great former STRS Executive director named James Sublett, I found the following words. "In January, 1974, the System began paying premiums for retired members under the then existing medical insurance program. Coverages were improved quite significantly by the addition of what amounts to a major medical plan, including prescription drug coverages, with no deductible. Effective July 1, 1974, this new plan was put into force for all retirants, with premiums paid by the system. Ohio teachers now have a medical insurance program that is paid up at retirement."

Of course, as we now know, STRS provided free HC to retirees for the next 18 years. Do the right thing and have a Health Care Debit card ready to go in time for the fall Health Care open enrollment period.

Click images to enlarge