High health care costs affect OPERS retirees

Two recent articles in the Wall Street Journal highlight the growing cost of health care felt by consumers around the country.

The Ohio Public Employee Retirement System, and our retirees, are not immune to these cost increases.

Among the many comments we see on the PERSpective blog, nothing seems to top the high cost of health care. In particular, many of our retirees have lamented the rising cost of prescription drugs.

The Wall Street Journal reported last week that federal actuaries estimated health care spending growth of 5.5 percent in2015. They project that costs will continue to rise at a moderate pace over the next decade. The increases are largely because of a stronger economy, faster growth in medical prices and an aging baby boomer generation.

Another recent Wall Street Journal article reflects even bigger growth in drug costs, far outpacing the rate of inflation.

The article, “Drugmakers’ pricing power remains strong,” states that drug companies’ ability to increase prices is nearly unparalleled in the business world. Runaway pricing is uncommon in low-inflation environments such as the one we’re in, so drug costs seem to be outpacing those of other industries.

The high-cost environment has fueled a sharp increase in drug spending: For instance, Medicare Part D spending rose 11.6 percent in 2015. The Medicare Board of Trustees said per-beneficiary spending on Part D prescriptions would increase by 75 percent from 2015-25, compared with a 37 percent increase in hospital spending during that time frame.

However, we’d like to let our members and retirees know that we are working on solutions as we head toward this year’s open enrollment for 2017, which takes place Oct. 15-Dec. 7.

For example, OPERS is promoting the approval by the U.S. government of biosimilar drugs, which are similar to, but cost up to 30 percent less than, original medical products that in many cases are cost-prohibitive to our members.

More information about prescription plans and medications will be provided in the Health Care Bulletin, arriving in late August, as well as in open enrollment materials that will send out beginning in late September.

Michael Pramik

Michael Pramik is communication strategist for the Ohio Public Employees Retirement System and editor of the PERSpective blog. As an experienced business journalist, he clarifies complex pension policies and helps members make smart choices to secure their retirement.

Michael Pramik

Communication Strategist

    • Speaking of high healthcare costs, I think that it is absolutely despicable that OPERS stopped paying premiums for spouses AFTER I had retired. Now everything that my husband and I worked for and saved for the last 30 years will soon be gone. Why didn’t you grandfather in those spouses that were receiving benefits instead of just cutting them off. I would never have retired if I had known that you would cut us off without a thought. We are forced to pay horrendous monthly premiums for the next 8 years until my husband reaches 65. You ought to be ashamed. All you had to do was to grandfather in those spouses of retired employees. That would have been the decent and ethical thing to do. I worked for 28 years, contributing to OPERS because I thought it was the safe thing to do. I could not have been more wrong. I cannot tell you how angry I am. Our financial future is ruined!

      • We understand your frustrations and that these changes can be difficult for our retirees and their family members.
        Please know that this was not an easy decision to make. Continuing to grandfather family members under current eligibility requirements would result in the retirement system making more severe changes to the health care plan to fund a health care program for other individuals in addition to career public employees. Changes like this were necessary to preserve the health care program long into the future for our retirees. Without them, the health care program would not have been able to be sustained.

        -Ohio PERS

      • Kathryn, I agree with everything you said. My husband and I are in the same boat… very sad indeed. The thanks we get for paying into the system..

      • We are in the same situation. In fact, my wife will be forced to have no insurance because we cannot pay the high premiums!

      • I too believe OPERS has let it’s retired members down. I have had to return to work in order to provide health insurance for my wife, who is disabled and unable to work. I remember when I went to work for the state in 1976 and the personnel officer told all of us that we never had to worry about health insurance after we retired, as members and spouses were covered by OPERS. So much for that lie. Thanks OPERS, (sarcasm intended).

        • Thanks for your comments. OPERS has never guaranteed health care to retirees; first and foremost we are a pension system that also offers health care to benefit recipients and their dependents. We know how important health coverage is and have made the appropriate changes over the past several years to ensure that we are still able to offer health care well into the future. Without those changes, the health care fund would not have been sustainable. Unfortunately you were misinformed in 1976. When in doubt, always call OPERS to hear first-hand information, especially when it concerns your pension benefits and health care coverage.

  • What’s the difference in “generic” drugs and “biosimilar” drugs? Seems to me like nothing is going to decrease the price of drugs nor healthcare unless obamacare ends. Amazing to me that medicaid and people that never worked for healthcare are thriving and getting low prices (I know this is true) while the retirees that have worked their whole life for these benefits are paying the price for both and getting so much less of the coverage we used to have. In fact, the middle class is in trouble too. Something is wrong with this system-and in one word-POLITICAL!

    • Thank you for reaching out. Generic medications are a cost-saving alternative to higher cost brand or specialty medications. (Specialty drugs are high cost medications used to treat serious medical conditions such as multiple sclerosis, rheumatoid arthritis, hepatitis C and cancer. More information on specialty drugs can be found in the 2015 OPERS Retiree Spring/Summer and Winter Newsletter insert editions. Biosimilar drugs are generic versions of biologics/specialty drugs. There is a great write up in the upcoming newsletter arriving in early September. Another great resource is the Connector Pharmacy Coverage video, accessible through opers.org on our YouTube channel that further discusses prescription medications.

      -Ohio PERS

  • I am very afraid of so called biosimilar drugs that may be similar , but not what the doctor has prescribed. I know from personal experience that even some current generic medications do not work as well as other generics when substituting for the brand name which is more costly. I really do not want OPERS to force me in the future to have to get a biosimilar drug because it costs less. It is my life and my body/mind and I am struggling to survive like everybody else. I do not want some bean counter at OPERS dictating what is best for me because it costs less for OPERS.

    • Prescription medications are a personal choice and we always encourage retirees and members to work with their doctor(s) to determine the best course of treatment options.

      Thanks,
      -Ohio PERS

  • While health costs are a co concern, my immediate concern is getting the WEP repealed. So, I hope you’re actively working on that, as well. Thank you.

    • WEP will never be repealed because it was enacted to help keep SS solvent. If WEP is repealed then SS benefits must be drastically cut.

  • You keep using the fact that they are more retirees now than ever before as an excuse to raise healthcare costs. But you don’t state the fact that the employees paid more into opers over the course of their employment as they were making more on their salaries as previous employees did 20-30 years ago. Also, current employees are paying even more to you. I stayed at my job because I was told I would have free healthcare after 30 years of service only to have it all change right before my retirement.
    This is frustrating because when I started working in 1983 medicare was not deducted from my salary and never was so I am not eligible for medicare when I turn 65. Feeling cheated

  • OPERS has indicated in previous posts and information distributions that”

    “No one is required to use the OPERS Medicare Connector. However, retirees who do not use the Connector to enroll in a medical plan will not be eligible to receive an HRA allowance from OPERS. ”

    Is this a requirement of OPERS, OneExchange, or is it madated by law?

    • Thank you for your question. It is OPERS policy that retirees who do not enroll in plan through the OPERS Medicare Connector will not be eligible to receive an HRA allowance. Enrolling in a plan through the Connector not only allowed for tax-free allowance but also provided OPERS the opportunity to ensure no retiree was left behind when signing up for insurance, something that OPERS would not have been able to do if retirees selected a plan through a private broker or the exchange. Additionally, enrolling in plans through OneExchange provided the opportunity for retirees to select automatic reimbursement whereas that option would not have been available through private brokers. It may be helpful to review some of the HRA materials online at medicare.oneexchange.com/OPERS or call OneExchange at 1-844-287-9945 who is the administrator of the account.

      Thank you,

      -Ohio PERS

    • Yes just like forcing us to purchase Medicare B with a commitment to refund most of the Medicare B cost then breaking that commitment by defunding our refund. Now stuck with the cost and giving me a medical fund managed by a company you pay for and defunding that fund in srages to $0 some day.

      • You are not stuck with paying for Part B medicare. You can always opt out of Part B. That would mean that Medicare would not cover part B expenses you incur, and you would not be able to get a medicare supplemental insurance policy. You would either have to pay all Part B expenses yourself or purchase a private insurance plan to pay for all Part B expenses but that would be pretty expensive even if you could find one. You would be in the same position as if you had not purchased Part B in the first place.

        • Regardless of how you look at it — OPERS changed the rules of the game on all of us. This is not extremely terrible for those of us who are still employed, but I feel very sorry for those who have been retired for a few years. FYI — “The OPERS Board of Trustees — the governing body of the system — is responsible for the administration and management of OPERS. The board meets monthly to review and formulate policies concerning the members, contributors and benefit recipients of OPERS, and the OPERS office staff.
          The board members also authorize the investments made with the system’s funds. They receive no compensation for their service to OPERS, but they are reimbursed for necessary expenses incurred while serving the system.”

  • I feel as though OPERS is treating their retirees terrible. I have worked under OPERS for 47 years. I always thought that when I retired I wouldn’t have to worry about health insurance because of all the years I have been paying into OPERS. Well, in January they changed all that. I have never worked under Social Security so I am not eligible for premium-free Medicare Part A. Supposedly there is some sort of Part A reimbursement for people like me but evidently the amount of reimbursement is a secret. Try emailing OPERS to ask what the reimbursement will be versus the costs of Part A, Part B, and supplemental insurance and they refuse to tell you. I am beginning to wonder if I can ever retire and give up the insurance I get through my employer. Is this the OPERS plan to keep people working so they keep putting money into the retirement system pensions rather than taking money out of the pension fund?

    • Good morning, thank you for sharing your thoughts. Healthcare is not a guaranteed benefit and can change at any time. That said, we know how important health care is and have made changes to help preserve the plan far into the future for our retirees, to keep this opportunity strong. This has been shared across multiple communication channels, including phone conversations. If you have any further questions, please call back into OPERS and we can review this with you. Additionally, you should have received a letter in August that informed those not eligible for premium-free Part A that you would receive 100 percent reimbursement (spouses = 50 percent) and that OPERS would need proof of enrollment in Medicare Part A. The letter also states (page 2), “Once you retire and have access to OPERS health care coverage, you must follow the following steps…”
      The only way to get Med A reimbursement is if you are retired and eligible for health care. These are the scenarios for Med A reimbursement:
      • enrolled in an OX plan with HRA
      • re-employed and enrolled in a plan with OX with no HRA
      • re-employed and enrolled in HIP and OX with no HRA

      If you would like another copy of this letter, please give us a call and we can resend the letter to you.

      Thanks,
      Ohio PERS

      • Once again we are all reminded that OPERS does not guarantee health care, but I am fairly certain that it was communicated to me, back in the 90’s, that after being employed for 10 years (and paying into OPERS), I would be vested and receive health care (and a 3% COLA). I’m also fairly certain that I have handouts stating same.
        Regards.

  • Hello OPERS, can you clarify or explain Ohio Administrative Code 145-4-06 (C)(1) regarding eligibility for healthcare which states, “…an effective date of benefits on or after 1/1/15, and…any age and has accrued at least 30 qualified years of employer contributions.” My question is that if a member can/will retire with 30 qualifying years for healthcare, why does it matter what Group they are in? And if it does matter, where in the Code does this get identified? Thanks

    • Tom,

      Great question, and we can explain.

      For our state and local members, the pension groups A, B and C are defined in Ohio Revised Code section 145.33. The law requires members of Groups B and C to earn more service credit, or to work longer (or both) to become eligible to retire with a pension.

      The administrative code that you cited does indeed define pension and health care eligibility, but it really targets only Group A members, because they are currently eligible to retire.

      The OPERS Board of Trustees added additional service credit and age requirements for those in Groups B and C to be eligible to retire with health care coverage. We regularly amend administrative code, and you should expect us to do so as the date approaches for the first Group B members to be retirement eligible.

      Meanwhile, we are preparing an informational guide that will help all members understand when they can first become eligible for health care coverage, depending on their retirement group. Look for us to make that public very soon. We’ll publish a blog about it and communicate it many other ways.

      –Ohio PERS

  • Thanks for the info, Michael, even though it wasn’t the result I was looking for. It was my understanding that meeting Group B requirements to retire with at least 30 health qualifying years was sufficient.

    Since most if not all areas of the website, materials and Code currently indicate the 30 years requirement, can you refer me to the Board meeting date/information that it was decided to shift the healthcare qualifying years to match the retirement eligible groups? Not sure how I missed that one. Thanks again for your help

    • Tom,

      That was approved when the entire health care redesign plan was approved, in the late summer or fall of 2012.

      –Ohio PERS

  • Can you please explain the logic of full coverage for certain lab tests (non-Medicare coverage) only if they are billed as routine? This acts as a DIS-incentive for those who make a good faith effort to manage a chronic condition. A perfect example would be a retiree with elevated cholesterol. Wouldn’t it be more cost effective long term to cover a lab test for cholesterol levels vs. the retiree choosing to forego the test due to the cost? Thank you for your response.

    • No problem. The logic OPERS applies to 100% coverage of certain lab tests used to screen for chronic conditions like diabetes and heart disease is the same logic that supports the non-Medicare retiree health plan’s coverage of other preventive services — to encourage the early diagnosis and treatment of a condition. We appreciate the suggestion to expand coverage for certain lab tests to 100% for individuals who are trying to manage a chronic condition. Review of the claims experience indicates the majority of non-Medicare enrollees with chronic conditions like diabetes and high cholesterol are not foregoing recommended lab work.

      We continue to monitor the plan for opportunities for improvement in health care coverage, balancing the needs of participants enrolled in the plan with the funds available to cover the costs of care.

      -Ohio PERS

  • With Open Enrollment coming in Oct will we have access to One Exchange to review our current policies vs the potential for making a change? If yes, will OPERS be sending any communications to the members? Thank you!

    • Thank you for your question, its wonderful to hear that you are thinking ahead into next year. Open enrollment is quickly approaching. The new carrier rates will be published in October, typically the first week. You can start preparations now by contacting current carriers to review your policies, calling OneExchange (1-844-287-9945), or reviewing your online OneExchange account for personal details. Because you are working through OneExchange for medical/prescription drug plan selections (and not OPERS), you will receive open enrollment information from them. Regarding the OPERS dental/vision plans, you will receive open enrollment information from OPERS separately, coming early October. Included with your OPERS information is your personal statement with HRA and plan amounts. OPERS open enrollment will be from October 15 to December 7, 2016 to better align with Medicare open enrollment dates.

      Thank you for reaching out,
      -Ohio PERS

  • Please use whatever influence that you have with OneExchange to dissuade them from reducing the number plan choices we have for Medicare Advantage. Most members in Ohio have many companies from which to obtain Medicare Advantage, however, I am in an area that OneExchange only provides two companies to choose from. One of those companies does not have a great reputation among medical service providers and customers. Leaving only one choice.

    Thank You

    • Thank you for reaching out. The number of Medicare Advantage plans available vary by area therefore it sounds like there are only a limited number of plans available to you. This is not controlled by OneExchange. You may want to consider looking at Medigap plan options, as there are typically more to choose from, however know that switching from a Medicare Advantage plan to a Medigap plan would mean that medical underwriting would apply. Check out medicare.oneexchange.com/opers to view plans in your area for the current year to give you an idea of what may be available. CMS releases the next plan year costs in early October. I hope this helps.

      -Ohio PERS

      • I really don’t want to be a jerk here, but I think it is important to provide accurate information to OPERS retirees even if the information is not what we want to hear. It is also important that the information be consistent, even if we don’t like it. Your response comes up short on both points.

        On 10/15/2016 the following response to a question appeared:
        “Michael Pramik says:
        October 15, 2015 at 1:21 pm
        GMC,
        OneExchange does not plan to include every plan that’s available in each area. It has certain criteria that carriers need to meet in order for them to be represented. They include the ability to send and receive electronic files, stability in pricing and excellent customer service. Also, not every provider wants to participate in public or private exchanges.
        You can get more information from OneExchange on this topic: 844-287-9945.
        –Ohio PERS”

        CMS information lists five (5) different companies offering Medicare Advantage plans in my zip code and county. Each of these companies sell policies on the private individual market. One of the plans is among the largest insurers in the State. I find it hard to believe that they or any other plan does not have the ability to send and receive electronic files. I find it amusing that this is a requirement of oneexchange when they do not allow a similar transfer of documents via electronic methods and require us to fax documents.

        Please, in the future, just provide us with accurate and consistent information.

        • Jim, I appreciate your due diligence as consistency is so important when communicating. Whether or not a carrier is on the OneExchange roster is a two way street. First, there is a business decision as far as if a carrier meets the requirements that OneExchange expects. This is what Mike spoke to in his 10/15/15 post. The second component to that is that if the carrier does meet the requirements, they have a decision to make as to if they want to offer their services through the Exchange. If they do choose to move forward, they can elect to limit plan offerings to certain counties (for example).

          I hope this helps clear up the previous statement.

          -Ohio PERS

  • Hello
    I just want to make a comment about the transition to one exchange in managing our healthcare. It has worked very well for me and I appreciate how easy it is to get the reimbursements ( once I went through the very cumbersome initial sign up process). The reimbursement system if signed up for automatic reimbursement works and occurs in avery short period of time after funds are withdrawn for payment.. Thank you for working so hard to make the new system work for us in the 65 yr and above age group

  • We are heading into month three, Medicare and insurance companies have received their payments. But I have yet to receive any reimbursements nor can I even set up an account with one exchange for my spouse to be eligible for reimbursement. Thanks

    • Thank you for your feedback. We’ve reached out to our contacts at OneExchange to look into your account. Someone should be calling you within 72 hours.

      thanks,
      Ohio PERS

  • How long are we going to get the HRA. I am speaking about single retirees with no spousal issues? Is this reimbursement going to be reduced or raised each year and how long will we be getting it.

    • Thank you for reaching out! The decision to continue the HRA is at the Boards discretion and will be discussed next year. At this point, no details are known. The OPERS Board of Trustees also has the discretion to allow an annual increase based on the inflation rate. If you still have it, look at the welcome letter that you received with your first Connector toolkit – it included a letter, magnet, calendar, etc. The back of the letter included a table that broke out the 2016/2017/2018 monthly allowance amount. If you would like another copy, please call in to OPERS and one can be mailed to you. Also, at the beginning of October you will receive your Open Enrollment packet. The enclosed personalize statement will include a 2016 and 2017 comparison. This should help with your immediate planning needs.

      Again, thank you for reaching out.

      -Ohio PERS

    • Linda, i hope i am wrong, but i wouldn’t be surprised that OPERS will start phasing out the HRA in the near future, saying it costs to much or other retirement systems don’t pay a HRA for retires. OPERS should start saving a bundle because of the spouse reduction in there subsidy.

      • My bet is that it will definitely be phased out — as we’ve been told over and over and over again “Healthcare is not a guaranteed benefit and can change at any time” — this pertains to the allowance as well. When the stock market is doing well, and OPERS gains a lot of interest on their investments, I bet the OPERS Board never again adds anything to our pensions or healthcare allowance.

        • Just like the Medicare Part B reimbursement being phased out as well as spousal coverage allowances, the HRA may follow suit in the future. I hope this never happens but just being a realist

  • On August the 22nd I posted a comment about the the 2017 health care rates . I checked the boxes to be notified about any follow up or new comments . There have been several made but I never received an email telling me about them . I would like to be kept in the loop so what must I do to make this happen ? Please advise. Thanks.

  • Just looked up our insurance costs for 2017. We were told they were raised last year due to the Cadillac tax and when that didn’t happen they would make adjustments. Well adjustments were made all right. The cost for my health plan(spouse) since I am not 65 yet went up from 400.00 a month to 760.00 a month for 2017. How can any of you sleep at night know that you have done this to people. Obama Care is worthless, they are dropping programs and their costs are also going home. Just wait people until you get your sticker shock new health care cost for 2017.

  • Deidre…..my husband and I were in shock when we got the price of the 2017 premiums……and we are going to having a difficult time paying the premium….I am not eligible for medicare for another 4 years!! We certainly are not making any more money thay we were last year.

    I wish….and I could be wrong but I think I would prefer a dumbed down policy with better rates…..I don’t understand why a person would need some of the tests offered my Med Mutual on a yearly basis….bone scan and colonoscopy…to name only two!

    Maybe Med Mutual could offer a tier 1 and tier 2 policy….just a thought

  • It is interesting to read all the comments in the blog where retiree’s share their experience with handling Health Care cost in 2016-17. I am 74 years old and retired into OPERS in 2006. My husband is 78 years old and we both depended on our OPERS retirement healthcare plan. Unfortunately we too feel cheated with the way things have changed. It would have been a better decision to grandfather in the existing retiree’s at the time these changes needed to be made. My husband has both heart and breathing problems and I too have medical problems as well. This is not unusual for people well into their 70’s. We both have several prescriptions to take daily. The writing is on the wall with the way all healthcare costs are skyrocketing that we will not be able to afford the prices of the drugs we need to keep us alive and well and will not be able to afford the insurance premiums that keep rising. We are just 2 average people who worked all our lives and believed that we could take care of ourselves as we aged. We believed we had our healthcare in retirement. I am positive that there are many retiree’s out there who are experiencing the same plight as we are. Who could have ever imagined this could be facing so many.

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