Retiree Health Care is solvent for 20 years

A friend told me, excitedly, that he has been approved for the new hepatitis C drug – the miracle drug that is supposed to cure this disease at a cost of $93,000 per patient. He has started the treatment and so far is doing great.

I hadn’t known he had the disease. Of course I’m happy for him.

I realized later I’m helping to pay for his treatment. He is married to a retired teacher and is probably covered through the Retiree Health Care Authority. So am I. His treatment affects my premiums.

RHCA can afford to pay for this. This is good news for everybody in New Mexico, including you.

RHCA provides health insurance coverage to retirees of New Mexico state and local government and schools. Active employees and their employers contribute a small percentage of payroll to the fund. Once those employees retire, if they choose RHCA for their coverage (before Medicare or in combination with Medicare), they pay premiums into the fund.

With tough cost controls and reforms, the program is now projected to be solvent through 2035, according to Mark Tyndall, RHCA executive director. This is a major accomplishment. When RHCA was created by legislation in 1991, the law required the program to start providing coverage to retirees who had not paid into it while working, with no start-up nest egg.   RHCA has been catching up ever since, while also chasing after ever-increasing health care costs as it serves mostly older adults, who tend to have expensive health needs.

A health care program that can pay its bills helps keeps doctors in business and hospital doors open. It’s that simple. No matter who you are or how you are insured, you can only see the doctor if one is available.

New Mexico’s physician shortage is well documented, as is the continuing crisis of cash-strapped small community hospitals. (See my column from March 2014 at So is the high percentage of New Mexicans who rely on Medicaid. Medicaid pays doctors so much less than other health plans that many claim they lose money when they treat those patients. We need the higher-paying insurance plans to enable the doctors to stay in New Mexico.

Back in the 1980’s, a labor union leader explained to me how “Cadillac” insurance plans help everybody by providing adequate payments to health care providers – in effect, subsidizing health care for those who can’t afford to pay. That was 30 years ago, when the health care marketplace was simpler. Those so-called Cadillac insurance plans have been pretty well wiped out, and so have some of the private sector unions that used to provide those plans.

Today, some of that funding has been replaced by the health insurance plans that cover our public sector employees and retirees, which are funded from the salaries of those public employees.

If you think government is using your tax dollars to treat its employees and retirees better than you, maybe you’re right. But somebody has to pay the real cost of keeping our physicians and health care facilities in business – and this is one way to do it. The simple truth is that health care costs more than most of us can afford to pay. While we continue to argue furiously over how to cope with that – including the ongoing debate over Obamacare – real people get sick and need help. My friend’s hepatitis drug is not the most expensive pharmaceutical on the market, Tyndall tells me.   Some cancer drugs cost more than $100,00 per year.

According to Tyndall, RHCA may be asking legislators next January to add another fraction of a percent to active government employees’ contribution to RHCA.

While that may look like an increase in the cost of government, just remember, it also benefits you.



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