Detroit's emergency manager is considering replacing health insurance for retirees under 65 with a $125 stipend to buy coverage from exchanges set up under Obamacare.
Kevin Orr, who is running the city while it navigates bankruptcy, will decide this week whether to implement the plan, according to the Detroit Free Press. Retirees over 65 would move to Medicare. The city has about 20,000 retirees, with half under 65.
The report noted that it was unclear how much insurance the stipend would buy. It said the city would help retirees find the best plan to meet their needs.
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Cutting benefits given to retirees is essential, Orr has said. Proposed changes to city workers' pension plans have spurred lawsuits from unions saying collective bargaining rights are being ignored.
Of Detroit's $18 billion in long-term liabilities, $3.5 billion stem from city pensions, while another $6.4 billion are related to other benefits, mostly retiree health care, Orr has said.
The newspaper said the city's costs for retiree health benefits would be slashed from $170 million annually to $50 million. That concerned one retiree who told the Free Press there was no way the stipend would replace his generous benefits.
His concern was echoed by Brian O'Keefe, a lawyer representing two Detroit retiree associations, who said the stipend "would be a relatively small percentage of what is currently being paid in health care benefits."
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