Retiree Benefits Task Force—For Comment Period
Extended Until June 1
The Retiree Benefits Task Force report was published in the March 15th edition of Almanac. We have received over 150 comments to date and are grateful to the current and retired faculty and staff who have responded to the report. In light of the widespread interest in this report, we are extending the deadline to accommodate those who still wish to comment. We welcome your suggestions and would appreciate receiving them by June 1, 2005. Please send all comments to Raymond Simon in the Office of the Associate Provost; his e-mail address is firstname.lastname@example.org.
—Amy Gutmann, President
—Peter Conn, Interim Provost
Retiree Medical Premiums
I am a member of the group (the “Class”) of professors who retired before 1996. Here are my comments on the above-referenced Report:
1. I hope the University understands that its proposals concerning Retiree Medical Premiums will create hardship for those of the Class who are, like me, on fixed incomes (I assume most of the Class is on fixed income). Naturally, I am dismayed by, and am not in favor of, the University’s proposals.
2. I hope the University understands that the problem of Retiree Medical Premiums for the Class will, in the nature of things, diminish rapidly, as the number in the Class diminishes (most must be well along in their 70s).
3. I think the University would serve its own interests (as well as those of its present and retired members) if it vigilantly and aggressively joined with other universities in opposing unnecessary health care cost increases. Two areas of unnecessary cost increases occur to me:
(a) The first is caused by the federal law forbidding Medicare from negotiating with the pharmaceutical giants for lower drug prices. Penn should join other universities in demanding the repeal of that law.
(b) The second is (or may be) caused by the unnecessary rise in fees charged by the health plan administrator, Highmark Blue Shield (an independent licensee of the Blue Cross and Blue Shield Association). According to the Pittsburgh Post-Gazette (3/30/05) Highmark’s fees resulted in 2004 in a surplus of $2.5 billion, thus pushing Pennsylvania’s four Blue Cross/Blue Shield health plans to have a surplus of $4 billion. The University should join other Pennsylvania Universities in ascertaining the facts.
—Ann L. Strong, Emeritus Professor, City and Regional Planning
I am responding to the Almanac article (March 15, 2005) sent to me by the University. I was a senior benefits specialist with 14 years of full-time service. One of my primary responsibilities was the administration and audits of the medical plans. Why should retirees increase in premiums exceed the yearly increase in premiums for active employees? Our contributions to the University were many during our years of employment and should be recognized. Promises made should be promises kept.
—Janice Grisan, Retired Benefits Specialist, Human Resources
Current vs. Future Retirees
The University’s Retiree Benefits Task Force Report is frightening me.
Since I retired from the University after 28 years of uninterrupted service in 2001, my RAP (Retirement Allowance Plan) benefits have seen an annual reduction totaling 16.17% to date due to increased health insurance costs. The Task Force proposal to decrease the University’s contribution to health care benefits from 70% to 60% of premium costs, even more if applied to the lowest cost plan, will increase my current monthly premium from $181.16 (family plan) (originally $155.94/mo. in 2001) to $242 a month (based on today’s premium), representing an increase of 33%, and further reducing my pension benefit by a total of $1,000 a year since my retirement in 2001.
I need not mention the increase of Medicare premium costs to retirees since 2002 alone these premiums have risen by 44%.
Employer provided health benefits do not duplicate Medicare. Rather, they help retirees pay medical expenses not covered by Medicare. Compared to my husband’s and my current annual Medicare premiums of $1,876.80 which cover 80% of our (Medicare approved) health expenses, the 65 Special annual premiums estimated by me to run $7,260 (exact figure is not available to me, my current cost is $2,174/yr) and covering just 20% of (Medicare approved) health expenses, seems totally unrealistic. Since the pool of pre-1996 retirees paying no premium costs has and will continue to diminish over time, the University should not place the burden of increased costs on this part of the retired population, and on those post-1996 retirees who do pay their fair (or perhaps unfair) portion of the cost.
It is my impression, after having carefully read the Task Force Report, that there is more concern about future retirees and containing current health costs for the benefit of current employees than there is for those who have serviced the University in the past and have earned their retirement benefits. I understand the University’s obligation to address the un-funded liability (FAS 106), and perhaps some of that liability should be borne by retirees as well. However, I strongly suggest the University find a better and fairer way to fix this problem and not on the back of retirees, current and future.
In a RAP Questions & Answers form, provided by the Human Resources/Benefits office some years ago, it was stated under “How much will my pension be?” If you worked a full career at Penn (about 30 years), your University pension, together with your Social Security at age 65, should equal or exceed the take home pay you were receiving just before you retired. In other words, the University’s pension plan is aimed at assuring that a person who works at Penn for 30 or more years can retire at age 65 and have enough retirement income to maintain his or her pre-retirement lifestyle. If you work fewer than 30 years at Penn, your pension would be adjusted proportionately.
What really scares me is that my RAP pension may not even be large enough to pay for the health insurance the University provides by the time I die, or even before I die. This, I am sorry to say, is reality, folks.
—Doerte R. Smith, Cell & Developmental Biology, Retired Staff
Consideration of Good or Bad
I have just received and reviewed the final report on the retirement program. While I am not qualified to comment on the accounting features of the report, as a faculty member from 1954 to 1989 I feel qualified to comment on the character of the document which I find to be lacking in any of the concerns to be expected of a major Penn report and much more like a corporate balance sheet devoid of any humanistic considerations.
Nowhere in the document is there any consideration of “good or bad” or “wrong or right” or, for those in retirement, will the proposals hurt a few or many or all. Is it right or wrong to withdraw promised benefits which were made for a lifetime? Is this good or bad, right or wrong for the moral standing of a great University? Is it in keeping with the values of fidelity, responsibility, fairness and equity which the University is dedicated to uphold and impart to 20,000 young people each and every year. Does the proposal’s seemingly mechanical approach appear more like a bottom line first evisceration of employee privileges than the product of a humanistic institution like a university? Which model should Penn follow?
The report certainly conforms to corporate policy. Should business standards be the guiding spirit of a scholarly institution? Do the moral and ethical principles of profitability fit the standards of a university? What kind of example does this offer to those looking to our great University for leadership. Specifically, how is the philosophy of the report to be reconciled with the values of a university as a family of scholars and their apprentices devoted to the search for and the dissemination of knowledge?
I would like to suggest that this report be reviewed by a committee of the Senate particularly with respect to its underlying philosophy.
—Robert J. Rutman, Emeritus Professor,
Animal Biology, Veterinary Medicine
Speaking Out welcomes reader contributions. Short, timely letters on University issues will be accepted by Thursday at noon for the following Tuesday’s issue, subject to right-of-reply guidelines. Advance notice of intention to submit is appreciated. —Eds.
Almanac, Vol. 51, No. 30, April 26, 2005