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Detroit to delay plan to enroll retirees in Obamacare exchanges

Detroit's emergency manager Kevyn Orr speaks to members of the Detroit Economic Club in Detroit, Michigan October 3, 2013. REUTERS/Rebecca C
Detroit's emergency manager Kevyn Orr speaks to members of the Detroit Economic Club in Detroit, Michigan October 3, 2013. REUTERS/Rebecca C

By Joseph Lichterman

DETROIT (Reuters) - The city of Detroit will delay its plan to move retiree healthcare onto the Affordable Care Act exchanges because of problems that are plaguing the roll-out of the online insurance marketplaces, an attorney representing the city said in bankruptcy court on Tuesday.

Detroit planned to provide all city retirees who are not eligible for Medicare with a stipend to purchase health coverage on the Affordable Care Act to take effect on January 1, said Heather Lennox, the city lawyer. Instead, Detroit will delay the plan a month, extending the current coverage through January 31.

Emergency Manager Kevyn Orr announced changes to current and retiree healthcare plans last month. Detroit has $5.7 billion in liabilities for healthcare and other retiree benefits, which accounts for about half of the city's $11.5 billion in unsecured debt.

The city will provide most retirees under 65, who are not yet eligible for Medicare, $125 per month to purchase coverage on the healthcare exchanges. Retirees with disabilities will get $200 per month.

Retirees over 65 will choose from three Medicare Advantage plans, in which the city will pay most or all of the premiums. They could also enroll in a Medicare Part D drug plan for which Detroit will pay the premiums.

City retirees and Detroit's largest union filed a complaint last month to stop Detroit from slashing retiree health benefits. Detroit asked federal Judge Steven Rhodes, who is presiding over Detroit's bankruptcy, to delay a hearing on the matter, but Rhodes declined the city's request and could hold a hearing on the issue as early as Friday.

"There is, I think it's fair to say, enough confusion created by the roll out of the Affordable Care Act at this point in time that to add to it or compound it in the way the city proposes here is really not necessary and not fair to the retirees," Rhodes said Tuesday as he denied the city's request.

The hearing to determine whether Detroit is eligible for bankruptcy entered its seventh day on Tuesday as unions, retirees and the city's pension funds continued to call witnesses to try and show that the city is not eligible for court protection.

Detroit must prove to Rhodes that it is insolvent, that it negotiated with its creditors in good faith or that negotiations were not practical.

Rhodes is not expected to make a decision on Detroit's eligibility until later this month at the earliest.

(Reporting by Joseph Lichterman; Editing by Chris Reese)

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