City Hall Diary
Last week the San Jose City Council discussed the issue of co-payments for retired city workers and their dependents. The recommendation from the city manager was to defer adding co-payments for one year to allow more time for this issue to be researched. Whatever the outcome, the decision will affect 3,000 retired city employees, including dependents, and the city budget.
The city would save $1,121,000 by applying co-payments to retirees and their dependents. This is quite a savings in itself—even more of a savings when you look at the city’s deficit.
Why is the topic of co-pay being discussed? Well, the fact that applying co-pay could save the city money is a good reason. Also, co-pay makes those who choose to go to the doctor accountable. For example, if one does not have to pay to see a doctor, then the service might be overused since it is free. If the city applied co-pays for each doctor visit and prescription, it would make one think twice about the necessity of a doctor visit.
This is largely due to the effect of “consumerism.” Employers find that having co-payments reduces health insurance premiums; however, by doing so it increases out-of-pocket costs. I have always had a co-payment attached to any and all of my doctor’s appointments. In addition, both my parents, who are retired teachers, make co-payments with their Medicare and out-of-pocket private insurance—no exceptions.
The issue here is what the city has “promised” its retirees and making sure the city keeps its promise. An overhaul of retirement benefits will not happen soon; however, thoughtful ideas should not be ignored. I think there is an opportunity for the city to keep its promise to retirees and save the city money.
One idea that I shared at the council meeting last week was to apply co-payments with the security of the city reimbursing the retirees and their dependents for them. For instance, a retiree would go to the doctor and pay a $10 co-pay to see a physician. The retiree would receive a receipt for the co-pay and mail it in to the city who would reimburse the retiree 90 percent, or in this case $9.
Let’s take, for example, that all 3,000 retirees/dependents go to the doctor four times a year and receive a monthly generic prescription twelve times a year. The twelve prescriptions would be $54 and four visits would be $36, which totals $90. (Original out of pocket for beneficiary is $100.) Therefore, $90 x 3,000 retires=$270,000. You then have the “difference,” or, better said, the “savings” to the city of $851,000 (the difference between $1,121,000 and $270,000).
Now, some of you out there are probably saying that it will cost the city more then $851,000 to manage the reimbursement. I have an answer for you: No, it won’t.
The city could easily implement a system that allows for reimbursements of this nature. For example, we could spend a few hundred dollars for Quick Books online—a web based system. Then, the city could import, via Excel, the information of all those eligible for reimbursements—retirees and their dependents—into Quick Books. Then, when a retiree/dependent receives their receipt, they can mail it in to the city and the (one) accounts payable person will enter the receipt into the system and mail the reimbursement check. The city auditor could have real-time access to Quick Books to oversee the transactions. Another viable alternative is that we consider contracting with a reimbursement service as is done for State of California employees.
Of course there are variables; however, I think it is important to ask the question: How can we do both? How can we keep our commitments to retirees and save the city money? The answer does not have to be one or the other.
Saving the city money and keeping promises can be accomplished. It’s not easy, but those involved, including me, are going to have to try harder to find the middle ground.
Sounds promising but the math doesn’t add up.
I don’t see how you are saving 851K. If the
current cost is $1121000 and you are planning
to reimburse 90% then you are actually saving
only 10% of 1121000 = 112100. That really
doesn’t seem like a lot of savings.
Fuzzy Math,
Read paragraph 2 and 7
#2
Sorry. The math makes no sense, and paragraph 7 is even more confusing. This appears to be an example of “bait and switch”.
peirre,
Just have them go to the county hospital. It is free and you don’t need to pay a copay. That way you and the bloated city staff can see what it is like to be citizen in this country!
Pier,
Just like you said, you and your parents have always had a co-pay. My wife (a teacher) and I (corporate employee) have always had co-pays. I think it is incumbent on city workers to tell us why they are so special that they need better benefits than the rest of us.
Name one company that hasn’t changed or DELETED health care coverage for retirees? Why should those people get better coverage than the people they supposedly serve?
Sorry but your plan just increases the size of government.
The EEOC said it was acceptable to make these changes, indeed why don’t follow the E E O C’ s most recent ruling (December 2007) and dump ALL retiree coverage. 100% legal.
There is a duty to represent the citizens of the City over that of the unions.
Let’s behave in a fiduciary way and protect the citizens first.
I agree with those who have stated that co-pays are a fact of modern health care coverage for the overwhelming majority of working and retired people.
While I don’t agree with waiving the co-pay for retirees, I want to believe that there is a method to Figone’s madness.
The thing I consider when something like this comes up regarding workers in the public sector is that people in such positions have no financial perks like stock options and bonuses. All that the cities, counties or the state can offer is attractive health and pension plans and designating even the most borderline of “holidays” as a day off.
People make their own choices but when it comes to a career choice most will weigh the pros & cons and consider the benefit packages. Public servants opted for a trade-off but I think that with a good pension package, they can afford a nominal co-pay and I feel confident that they’ll be joining the rest of us in forking the $ over after the staff and council have revisited this issue.
I know a retired state employee who is required to make co-pays. Why should it be any different for those who retire from a job with the city?
And while I’m no math expert, I can’t make heads or tails of the calculations provided. Maybe this sort of math is the reason why the city budget is so out of whack?
Pier,
Where does the $1,121,000 number come from?
Is there some assumption here that retirees will visit the doctor less if they have to pay a copayment? If so, how many less visits are being assumed?
If not your example makes no sense.
Pierluigi,
You are not telling the entire truth here.
The only retired city employees with no copay are those who went with the lowest health care cost insurance option. This was offered by the city so the city did not have to pay the higher cost of other plans. There are many city retirees paying copayments who opted for other insurance plans.
To Willow Glen Dad #5,
All active city employees pay a copayment. I called the city manager’s office and verified this. You seem to have a resentment of city employees (“I think it is incumbent on city workers to tell us why they are so special that they need better benefits than the rest of us.”) I worked in a grocery store for 20 years and had absolutely no copayments. Do you also dislike grocery store workers?
Are you just as angry at the corporations you work for that have sent so many of our best jobs to other countries and lowered our own standards of living, including yours? Are you just as angry at the corporate heads responsible for our credit meltdown and a looming recession, while they still made their millions? They have had much more impact on you and your families life rather than a relatively small handful of retirees. That is where your anger should be directed, not at those on the grunt level.
The city should be looking to expand the business tax base and quit building so many high density homes that suck money from the budget. We provide the housing while other cities provide jobs; that is one of the main roots of the budget problems….not a copayment by a relative handful of retirees.
There are a lot of good people working for the city who do a good job and work hard. Unfortunately, not too many of them work in District One!
Runaway benefits are eroding the city govt’s ability to deliver even minimal service levels. (Look at the poor condition of our city’s streets and parks). I believe that there’s a simple solution. Start hiring part-time workers (sans benefits) to get caught up on some of the city’s backlog. The city could get more “bang for our buck” by offering college kids $15-20/hr to maintain the parks, fill potholes, remove graffiti, work in libraries etc.
The city already jobs out many of these tasks to the private sector. (recently I saw a private landscaping company cutting the lawns and trimming hedges at a city maintenance yard). It’s time to go “all the way,” and start putting some of these tasks up for bid at a much cheaper rate.
Pete Campbell
Mr. Olive,
From what I understand you are saying is that the city or any other employer get a lower insurance premium if they choose a plan that has copayments and that is where the city saves $1,121,000. However because the council does not have nerves of steel to implement copayments for retirees you are offering an alternative to take advantage of the lower cost plan and reimburse copayments which is a number lower then $1,121,000. Even if the copayments were $500K the city still saves money. I understand your plan but I would rather see photo radar back in place giving out tickets and raising revenue for the city.
I believe San Jose has no choice but to keep the promises made in the past and present. However, moving forward the mayor and council members will have to analyze the city’s revenues, expenditures and priorities. This may involve tax increases, service cuts, less generous employee benefits, or some combination.
I admire Mayor Reed for wanting to eliminate this continuing structural deficit. I would not want to do the “heavy lifting” that this will require.
Sigh…. This county is broken and can’t be fixed. Funny its the center of technology yet it’s govt could find the cure for cancer then loose it in the mail.
As a taxpayer whose primary concern is safe streets, I found it quite distressing to learn that our new City Manager’s first effort towards cutting city spending involved reneging on contract language and past practices of the city’s own design. Playing word games with the men and women who put their lives on the line is unwise, unethical, and counterproductive.
I invite anyone who believes that the current fiscal crisis justifies playing a shell game with employee benefits to take a look at the job announcements at City Hall. What you will see right there in the city’s own words are the wages and benefits it offers in exchange for the labor of the potential employee. For a qualified job-seeker, those wages and benefits will be measured against the job description before the decision is made to apply for the job, and in the case of a firefighter or police officer, those wages and benefits are often the very reason the applicant agrees to invest himself, his youth, and his future with a given department.
But now the city, for fiscal reasons, wants to pretend that the words in the offer can mean whatever it wants them to. And some of you people actually agree!
Well, what if the employees were to play the same game? What if the firefighters begin to pick-and-choose the parts of the job description they’ll honor? What if they decide not to “enter burning buildings” or “administer emergency first aid,” claiming a concern about the very legitimate danger posed by falling roofs and contagious diseases? What if the police officers do the same? Do you want individual police officers deciding which calls to handle—based on how things are going for them at the moment???
Just because things aren’t going so well for the city at the moment is no reason to breach contracts or break trusts. Once those are broken they will not be repaired, and we citizens will be stuck with a bunch of pissed-off civil servants who will spend their careers “giving it” to the city instead of serving the taxpayers.
Ms. Figone, herself a person familiar with weighing employment offers, best change her tactics or San Jose will wind-up permanently fishing for its job-applicants from the bottom of a very deep and depressing barrel.
Steve, in post #9, you said all active city employees make a copayment. That’s not correct.
Pier,
Pay for the retirees copay from the money the city has saved by having our police department so understaffed for so many years. A city our size should easily have another 300-400 officers, which translated into savings of $30-40 million dollars annually.
#15 A Taxpayer in San Jose,
Which group of active employees has no medical deductible?
I have never been a City or any type of a Gov`t. worker, nor am I affiliated.
I am a fourth generation San Josean.
I understand and appreciate everyones opinion, but…
In defense of many City Employees, in the past many of these older City employees didn`t make the kind of money todays city employees make. These older City workers including the SJPD and Fire Dept. people were paid a lot less than the rest of us at the same time period.
They chose benefits and job security as opposed to the higher paying jobs. The SJPD for example were paid a fraction of what todays officers are paid. Their weekly retirement compensation is a lot lower too. To ask these dedicated people that are retired to do a co-pay is not fair.
I had my co-pay increased last year like many of us. I purchase my own health insurance and provided for my own retirement, but that was my choice.
P.O. wrote:“For example, if one does not have to pay to see a doctor, then the service might be overused since it is free. If the city applied co-pays for each doctor visit and prescription, it would make one think twice about the necessity of a doctor visit.”
That is EAXTLY THE CRUX of the issue. If it’s free, Mommy brings little Johnny to the doctor when he gets a sniffle. Despite the fact that virtually everyone over the age of ten knows that there is no cure for the common cold, and despite the fact that most reasonably
intelligent people know that antibiotics are ineffective against viruses, when health care is free, Mommy will utilize the system. She’ll trot little Johnny in with his sniffles and demand antibiotics…at NO COST TO HER, but at a huge cost to taxpayers. That attitude takes valuable physician time away from things they can actually do something about, and simultaneously raises the cost of health care for everyone.
Two decades ago I spoke with Bob Sillen re this issue. He said VMC found that every $5.00 increase in co-pay reduced the usage of walk-in non-emergency clinics by something like 20%—Mommy ain’t takin’ the kid to the clinic to “cure” his sniffles if it costs $5.00; but Mommies will overwhlem the clinic if its free.
Co-pays for public employees are a MUST. The Retail Clerks struck in SoCal a few years back over a $15.00 co-pay. They were out for many weeks withy no pay. They ended up accepting it. The $$ they lost on strike were not recouped over the life of the 3 year contract they finally agreed to.
Public employees are too habituated to feeding from the public trough, getting freebies the rest of us would kill for. Drop the hammer now, and require at LEAST a $10.00 copay per visit and for drugs, and have an annual deductible of at least $250.00 before the insurance pays dime one. Watch how fast the freeloaders stop dropping in with Johhny & his sniffles.
P.O. continued:“An overhaul of retirement benefits will not happen soon”. I ask—WHY NOT? Need to pay a mil$ to some consultants first?
The he got realyy stooopid and wrote:“One idea that I shared at the council meeting last week was to apply co-payments with the security of the city reimbursing the retirees and their dependents for them. For instance, a retiree would go to the doctor and pay a $10 co-pay to see a physician. The retiree would receive a receipt for the co-pay and mail it in to the city who would reimburse the retiree 90 percent, or in this case $9.” The cost of administering that system would outpace the $1.00 not reimbursed…another bureaucracy. Just moving $$ around. It would be cheaper to do nothing.
#20 John MichaelO’Connor,
Pier said the copayment was in regards to 3,000 retired city employees. I doubt many of these retirees have kids of the age to bring into the doctor for the sniffles. Many of them maybe police officers who suffered injuries after years on the job protecting you and me, and now need to see the doctor in their retirement for treatment. I think I read in prior posts that you are a lawyer. The city made a deal with these retirees, good or bad, to pay their deductible if they opted for the lowest cost health plan in their retirement. The budget problems will not be solved by the city breaking an agreement made with this relatively small group of employees. As a lawyer I am sure most of your business has to do with representing those wth agreements that were violated, so why do you support the city breaking its agreement with these retirees? Also, if you check with the city as I did, active employees do pay copayments for their medical plans. You stated “Public employees are too habituated to feeding from the public trough, getting freebies the rest of us would kill for.” The San Jose Police Department has an extreme shortage of applicants to be officers. Put in your application. Also, what is driving the cost of medical insurance is not those with no or low deductibles, but those with no insurance who repeatedly use the emergency rooms as their primary care physicians, and by law are treated for free. Enough dumping on 3,000 city retirees. Pier and the rest of the council need to quit studying how to get blood from a turnip, and instead figure out how to add to the taxbase of our city.
#18 and Pierluigi
I agree with Dave. The City of san Jose is in the “service business”, “city services”. This is the main thing the residents of San Jose expect from our city officials.
The “key” is to build revenue for the city government so the city can pay for city services. It`s pure and simple!
The city manager can only cut so much from all her staff before all is lost. All that is dear to us.
Build revenue, find out what the problems are…fix it and grow the revenue.
#21:I suspect SJPD has a shortage of applicants because there are too few people willing lay their lives on the line minute by minute only to be treated with disrespect, spit on, attacked with weapons, and then attacked by the “do-gooders” who think the cops should have talked the asshole out of it instead of shooting him when he attacked the cop with a knife or a gun.
Yeah, I know retirees don’t have kids with the sniffles. But before they retired they had those kids. The system is overutilized by people who have to pay nothing—whether they be welfare recipients, illegal aliens, or folks with no deductible, no co-pay insurance plans.
We don’t need new taxes, Steve, we need restraint at all levels of government. It is NOT the government’s job to take from those who have and give to those who either don’t want to spend it or who don’t have it or won’t work. That’s why we have these horrendous deficits at all levels—too much social engineering.
Back to basics—public safety and infrastructure.
When something is free, people will use it whether they need it or not—human nature.
Pierluigi, Steve #21,
OAKLAND, “things are getting so bad, out of hand,that last nite on the 6pm news Oakland Mayor said,” he wanted to hire 100 new police officers NOW”. Things are out of control in Oakland.
The Mayor of Oakland has serious budget problems too.
District Six, another accident on Curtner and a Willow Glen Home burglarized in broad daylight. Homeowner watched them drive off over his lawn with his furnishings.
San Jose needs another 50 police officers,NOW! Thats only adding 5 officers to each council district.
Present, “Retired Police Officers” are not making what our current SJPD officers are making. Most have retired making $30-$35,00 per year. They don`t get Social Security benefits. To charge them a deductable would be a crime. They don`t have the same benefit package.
San Jose is in the Service business, SJPD officers are the most important important people serving the residents.
Instead of continued cutting and continuing to build a bedroom community which adds to grid lock, we need to build revenue generating businesses that raise money to pay for city services like the PD.
#22 John Michael O’Connor,
“We don’t need new taxes, Steve, we need restraint at all levels of government.”
Go back and reread my comments. I never said we need new taxes. I said we need to grow our tax base….quite different.
“The system is overutilized by people who have to pay nothing…. or folks with no deductible, no co-pay insurance plans.”
Who said “these folks”, ie the 3,000 city retirees, pay “nothing”? Pier referred to a copayment, nothing about what deductibles they pay. A copayment and a deductible are different, and Pier, you and others are making these 3,000 retired city employees scapegoats. I am sure you won’t find it wrong when someday your social security and medicare benefits are cut in your retirement so you can do your fair share to pay for our federal budget woes. Who cares about a silly agreement or understanding you had, or the money you have been paying into social security all these years.
#22 Johnmichael join us:
San Jose Residents too:
“LETS GROW JOBS FOR ALAMEDA COUNTY”…Support BART to the East Bay project.
Support the new VTA “Sales Tax” in Santa Clara County. “Help our neighbors to the north grow.
Paid for by Santa Clara County residents for “SMART GROWTH IN ALAMEDA COUNTY.
#25 wrote:“Go back and reread my comments. I never said we need new taxes. I said we need to grow our tax base….quite different. ” Ah, actually, Steve it isn’t different. Why do you need to grow a tax base except to collect more taxes???
Tax and spend is not the naswer. We are in so much trouble because government gets involved in too much stuff that needs to be done by the private sector, or not at all.
We may WANT a public art program, but we don’t NEED it, and we cannot AFFORD it. [Who REALLY wants it are the artists and the connected idiots who form the panels who gave us the gold idiocy nude in the Gold Building, Quetzalcoatl, and “Rainbow Man” outside SJMA—all huge wastes of $$$$ Oh, and don’t forget a staff of several people employed by the city to “administer” a program that gives us one or two shitty pieces of art/year. How do we justify that personnel in hard times?] We don’t need a myriad of staff “managers” who provide little value added to the work of the people they “manage”.
We NEED cops, firefighters and infrastructure at the city level. All else is wants we cannot afford right now.
Richard #23,
I am not sure why you directed your comments towards me in this post. I think our department is understaffed and has a complete lack of support from the city.
I am a supporter of hiring more police and as far as I can tell I am in agreement with your comments. If not, please explain. Thanks,,,,Steve
#27 asks the question “Why do you need to grow a tax base except to collect more taxes???” The answer is very simple; the City of San Jose has a large residential population which needs a bigger business tax base to pay for the cost of supporting the citizens who live here. And actually, John, new taxes versus growing our tax base are obviously different. Growing our tax base involves new business locating in San Jose thus generating additional sales tax revenues. “New taxes” are pretty self explanatory ie raising current tax rates. Did I ever propose raising current tax rates? No. Look at the cities that ring San Jose. Very large business tax bases supporting well funded infrastructures. That is what San Jose needs to do. Not more high density housing which sucks money from the infrastructure.
Also, although you claim you support our cops and firemen, and agree there is a shortage of police applicants, you still wish to break an agreement the city has with its retired officers and firemen. As previously stated, I am sure you will be more than willing to give up your own social security benefits after you are retired so the federal budget can be balanced on your back. After all that is what you are asking 3,000 city retirees to do, many of them cops and firemen you say you support.