The private health insurance exchange for city retirees announced by Memphis Mayor Jim Strickland this week is just part of an emerging package of benefits designed to bolster efforts to hire more Memphis police officers and firefighters.

JIM STRICKLAND

And Strickland said Wednesday, Nov. 9, it is not the last step.

More parts of the package are to come as the city begins contract negotiations with all of city government’s municipal unions in 2017.

“We are committed to do all that is reasonable to better compensate them,” Strickland said, generally citing the negotiating process to come.

The private health insurance exchange for retirees comes after two pay raises for police and firefighters in the last year, as well as recruitment bonuses, promotions, a new police rank and a down payment assistance program for police officers who buy a home within the city of Memphis.

But even with those changes primarily aimed at bolstering the police ranks, Strickland said the issue of the city’s decision to cut its health insurance coverage subsidy to all retirees two years ago kept coming up from police and fire union leaders.

“We all heard routinely that our current officers and firefighters wanted the city to reinstate a subsidy for the pre-65 retirees,” said Strickland, who was a City Council member until he became mayor in January.

The city couldn’t go back to those exact terms, according to Strickland, and it couldn’t stay with the existing plan either.

Strickland said staying with the existing arrangement, in which the pre-65 retirees paid all of the insurance premium, was still costing the city money.

“Even though they are paying 100 percent of the premium, the premium’s not big enough to cover the entire cost of the health care,” he said.

City retirees 65 and older are covered by Medicare. But police and firefighters make up the bulk of the retirees younger than 65.

City human resources chief Alex Smith puts the number at 1,100 of the city’s 3,800 retirees. And police and firefighters are the two biggest groups of city employees overall.

When the city cut the health care subsidy for pre-65 retirees, critics – including the police and fire union leaders – were vocal in saying it accelerated the dwindling of police ranks in particular to around 2,000 officers. Some council members questioned whether that was the precise cause.

Strickland says it was part of the reason.

“For a couple of years prior to the changes in benefits, very few officers were hired,” he said Wednesday. “Every year there is an attrition of officers (roughly 100 a year). For a couple of years we didn’t replace those officers. We weren’t keeping up with attrition. Then the benefit changes happened.”

And the police ranks dropped more.

“That was because of the benefits cuts in my opinion,” Strickland said.

The city’s current goal is to increase the force by at least 400 officers net with attrition factored in.

And Strickland says city efforts have drawn 1,800 applicants this year compared with about 500 in previous years.

“We’ve had fewer officers retire and leave the city than in the last two years,” he added. “We still want fewer of them to do so.”

Leaders of the police and firefighters unions have pushed for a restoration of the subsidy and argue that the private exchange means higher deductibles, something Strickland has acknowledged. And the addition of health reimbursement accounts in Strickland’s plan means retirees would have to find that money up front, which is another concern of the union leaders.

Rather than finding the money in the city budget for restoring the 70 percent subsidy, Strickland said the exchange and HRA addition gives retirees more options to tailor a plan to their individual needs.

The HRA approach is a $14 million to $16 million line item built into the current city budget, which runs through June 30. The exchange plan will take effect in March.