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Report projects $136 million in savings on health costs

Erie County is looking at more than $136 million in future savings on long-term retiree health care costs as new employees without those benefits begin replacing workers who are entitled to lifelong health insurance covered by the county.

According to a recently released Government Accounting Standards Board valuation report, substantial savings will continue to accrue to the county as the result of a decreased liability in the county’s retiree health care benefits, which were estimated at $707.7 million in 2010, and saw an 8 percent drop to $648 million in 2012.

The estimated future savings declined even further in the latest report to $511.7 million, which is a reduction of $136.3 million or a 21 percent drop since 2012.

County Executive Mark C. Poloncarz on Wednesday said the projected savings are because of current contracts his administration negotiated with the county’s three largest employee unions, which all include increased health care contributions from workers and the end of retiree health care coverage for new workers hired after the contracts were ratified.

“Because of the contracts that we negotiated during the last two years of 2013 and 2014, we able to now quantify that those contracts will save an additional $136 million in the long run on retiree health insurance costs,” said Poloncarz.

In the meantime, the county will begin this year saving roughly $10 million annually because of the reduced costs associated with retiree health care, he said.

“Over the next 15 years, we could begin seeing a savings of $136 million in total,” Poloncarz added.

The projection of a $10 million annual savings was included in the current year’s budget. Those savings were based, in part, from a change in the drug plan co-payments that the administration negotiated with each of the unions.

Under the current contract, prescription coverage for retirees older than 65 was moved to the Employee Group Waiver Plan. The longer-term projected savings are a result of the county not having to pay health care retirement benefits for future employees and having fewer retiree health care claims over time.

Current contracts with Civil Service Employees Association Local 815, CSEA Local 815 Erie County Corrections Officer Unit, and the Teamsters Local 264 all include increased health care contributions from workers and no more health coverage for retirees hired after the ratification of their current contracts with the county.