HOUSE JOINT MEMORIAL 1

53rd legislature - STATE OF NEW MEXICO - first session, 2017

INTRODUCED BY

Tomás E. Salazar

A JOINT MEMORIAL

RECOGNIZING THE IMPORTANCE OF AFFORDABLE HEALTH INSURANCE FOR RETIRED PUBLIC EMPLOYEES AND EDUCATORS; REQUESTING LEGISLATION TO IMPROVE AND ENSURE THE LONG-TERM FINANCIAL VIABILITY OF THE RETIREE HEALTH CARE AUTHORITY.

     WHEREAS, in enacting the Retiree Health Care Act, the state committed to providing comprehensive core group health insurance for persons who have retired from certain public service in New Mexico; and

     WHEREAS, that act created the retiree health care authority and its governing board to fulfill that commitment; and

     WHEREAS, the authority provides health care coverage to more than sixty thousand retired public employees and educators and their eligible family members; and

     WHEREAS, more than one hundred thousand active employees make contributions to the authority with the expectation of a reasonable benefit upon retirement; and

     WHEREAS, more than ten percent of New Mexico's adult population is or will soon be covered by the authority; and

     WHEREAS, the authority's program serves as an important tool in the effective recruitment and retention of qualified public employees; and

     WHEREAS, the program has faced financial solvency issues as recently as 2007, when actuaries predicted a complete depletion of the program trust fund by 2014; and

     WHEREAS, in 2009, the legislature and the authority's board jointly implemented changes, which consisted of increases in retiree-paid premium costs and in employee and employer contributions, to extend the life of the trust fund to 2026; and

     WHEREAS, in 2012, the authority's board adopted a five-year strategic plan to further improve the program's solvency; and

     WHEREAS, the plan called for the following changes:

          A. increase pre-medicare cost sharing by raising deductibles and copayments;

          B. decrease the subsidy, or percentage of premiums paid on behalf of, pre-medicare retirees;

          C. decrease the subsidy for pre-medicare spouses of retirees;

          D. eliminate the subsidy for retirees with multiple dependent children;

          E. beginning in 2020, implement a minimum retirement age of fifty-five for new, non-public safety retirees to receive a subsidy;

          F. beginning in 2020, increase from twenty to twenty-five the years of service required for new, non-public safety retirees to receive the maximum subsidy;

          G. eliminate the six-thousand-dollar ($6,000) basic life insurance benefit for members retiring on or after January 1, 2012; and

          H. increase the amount eligible members pay toward prescription drugs; and

     WHEREAS, those changes resulted in a projected extension in the life of the trust fund to 2036 and in deposits of more than two hundred one million dollars ($201,000,000) into the fund; and

     WHEREAS, governmental accounting standards board rules have required the authority since 2006 to biannually report its actuarially accrued unfunded liability; and

     WHEREAS, in 2006, that liability was four billion one hundred million dollars ($4,100,000,000); and

     WHEREAS, measures taken by the authority and the legislature have reduced the trust fund's actuarially accrued unfunded liability by three hundred million dollars ($300,000,000) to three billion eight hundred million dollars ($3,800,000,000) as of June 30, 2016; and

     WHEREAS, beginning in fiscal year 2018, governmental accounting standards board rules will require full acknowledgment of actuarially accrued unfunded liability on each participating entity's balance sheet; and

     WHEREAS, for the past four regular legislative sessions, legislators from both political parties have introduced legislation to improve the program's long-term viability by increasing the contributions required of active employees and their employers; and

     WHEREAS, none of that legislation has been enacted; and

     WHEREAS, Senate Bill 7 of the 2016 fifty-second legislature, second special session, as enacted, reduces projected future revenue to the authority by three hundred fifty million dollars ($350,000,000) over the life of the trust fund; and

     WHEREAS, that reduction will decrease the program's projected solvency by between three and four years;

     NOW, THEREFORE, BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO that it be requested to pass legislation that would, by adjusting employee and employer contributions, improve the long-term financial viability of the retiree health care authority, increase the program's funding ratio and ensure that the program's benefits continue for future participants.

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