Double Trouble for Detroit Retirees

October 24, 2013

The whole point of ObamaCare was to make it easier for vulnerable Americans to obtain health coverage. But unless the federal insurance exchanges are fixed soon, the law might wallop some people at their most vulnerable moment: Detroit's retirees, says Shikha Dalmia, senior analyst at the Reason Foundation.

  • Detroit's emergency manager, Kevyn Orr, has announced that to return the city to solvency, effective Jan. 1, he will stopproviding coverageto 8,000retireesunder age 65.
  • Instead, they will receive a $125 monthly stipend to use toward private plans from the exchange. (Spouses and dependents don't get anything.)
  • The hope was that the Affordable Care Act's subsidies would kick in for unmarried retirees making from $11,490 to $45,960 and married retirees making from $15,000 and $62,040 annually, the cutoffs for eligibility.

The hitch is that the Michigan exchange, like many of the 35 others run by the federal government after the states refused to build their own, has been beset by glitches.

  • Even if consumers manage to enroll, however, it's unclear they will actually get coverage given that the exchange reportedly isn't providing accurate enrollment information to underwriters.
  • Should that happen, Detroit retirees who have been kicked off the city's coverage would have no option.
  • They would have to join the ranks of the state's 1.3 million uninsured.

Yes, it may be hard to feel sorry for Detroit's retirees given all the special benefits that they've received over the years, including an extra paycheck every year as a Christmas bonus and death benefits to ineligible families of workers. This largesse depleted the city's pension funds and forced it into bankruptcy.

But union leaders misled rank-and-file retirees, pretending that they could rob their own future without suffering the consequences. Now the same retirees might find that ObamaCare has misled them, too.

Source: Shikha Dalmia, "ObamaCare Is Double Trouble for Detroit Retirees," Bloomberg, October 16, 2013.

 

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