Bottom Line on the Budget: Administration Drops the HSA and Other Trailer Bill Objectives

ACSS has consistently pushed back on the “equal sharing” (50/50) of costs between employee and the state for funding retiree healthcare. We are pleased to report that on Friday June 5, the Administration agreed to drop language in the trailer bill requiring equal sharing of costs for retiree healthcare (as defined in Section 11 of the amended trailer bill). ACSS was concerned that 50/50 cost sharing would be implemented statutorily. We are declaring victory that this item is NOT becoming statue and is being dropped altogether from the budget. The Legislature has been supportive of our request to keep health care proposals out of state budget trailer bill language completely.

In addition, this week the Brown Administration tossed out the CalPERS high deductible health care plan. The Administration realized that without a high deductible plan, there is little use for an HSA. In addition, the Administration also removed some trailer bill language that applies to new hire’s formula for retiree healthcare plans, increases the vesting period for new hires, and removes some language in reference to Medicare reimbursements. The Administration has decided to drop these objectives from the budget and instead, pursue them in bargaining. Battling it out with the bargaining units may take months, which means that implementation for managers and supervisors may be drawn out even further.

The amended trailer bill language:

• requires verification of eligible health care plan participants
• defines, in more detail, the prefunding of employee contributions
• lists requirements that CalPERS report to the Department of Finance on costs and status of health care plans
• sets a lock on the state retiree health account until 2046

At this point, we can conclude that these objectives are the bottom line adjustments to the budget from the Administration.