Nancy Naples left her job as Erie County comptroller in 2005 with more than her small pension. After 12 years as the county’s top fiscal watchdog, Naples also received a lifetime of county health insurance for herself and her wealthy, energy-executive husband.
Anthony M. Masiello, now a successful lobbyist, ended his 35-year political career in 2006 after serving his third term as mayor of Buffalo. The city has bought his family health insurance ever since.
Carl J. Calabrese, a former deputy Erie County executive who is now a partner in the same lobbying firm as Masiello, also gets free government-financed health insurance. Calabrese began receiving it in 2007 from the Town of Tonawanda, where he spent 14 years as a councilman and town supervisor before moving on to County Hall.
And that’s only a short list of the high-profile elected leaders in Buffalo, Erie County and its suburbs getting government-financed health insurance for life at little, if any, cost.
Charles M. Swanick, the former Erie County Legislature chairman now running for the State Senate, gets it for free. So does Patrick M. Gallivan, the former Erie County sheriff who is now a state senator.
Mark G. Farrell will be paying 10 percent of premium costs when he retires as Amherst town justice at the end of the year. There are more. Many, many more. All entitled to a lifetime of health care, courtesy of the local government taxpayers who once employed them.
While the national debate over expanding health care continues, the local debate is just as often over the large number of retired public employees getting government-sponsored health care for life. In some instances, governments have more retirees than current workers collecting free or discounted health insurance. Others have fewer retirees, but the bill for their retiree insurance nonetheless exceeds that of their current workforce.
Some argue that retiree health care encourages higher-paid employees to retire earlier than they otherwise would, lowering the payroll burden on local governments. Others say it’s a good model that ensures people who devoted much of their lives to a job have adequate health care in retirement.

‘Times have changed’

But others cite skyrocketing costs that are crushing local governments and school districts.
• Erie County pays $41 million annually in health insurance for about 2,950 retirees. Insurance for 3,900 current employees costs $48.4 million annually, county officials said.
• The Buffalo School District pays $64 million annually on health insurance for 3,800 retirees. That exceeds the $58 million in health care premiums the district pays for its 4,800 current employees, according to school district data.
• The City of Buffalo paid $30 million on health insurance for current employees and $35 million in retiree payments in the city’s 2010-11 fiscal year, according to a report by the Empire Center. The total increased to $72 million in the 2011-12 fiscal year, when there were 2,485 current employees and 2,592 retired ones receiving health care benefits, according to the Brown administration.
“When I came into office in 1994, health care for retirees and current employees was $24 million,” said former Mayor Masiello. “When I left (Dec. 31, 2005), it was $64 million. This is a huge amount of money for cash-strapped cities to be paying.”
“I’m very grateful and appreciate what I have had, and I earned it, but times have changed,” said the former mayor, city councilman and state senator. “I think today, with the cost of health care, everybody has to pay something.”
Masiello now pays a portion of his health care. Having turned 65 earlier this year, Medicare is his primary health care plan. His city health policy continues to fully cover his immediate family members and also covers his own medical costs not covered by Medicare. Masiello must, however, pay a monthly Medicare premium, and because Masiello still makes a good income, he pays the maximum premium, which can run as much as $5,000 annually.

Contracts set standard

Elected officials represent a fraction of the government-funded insurance costs. Most of the money goes for the health policies of thousands of unionized government employees who served the public as teachers, police, firefighters and other civil servants.
Often, retiree health benefits given to elected officials mirror benefits negotiated into employee union contracts. That’s the case with Buffalo, where the benefits given to elected officials are tied, by City Charter, to the benefits of white-collar employees in AFSCME Local 650.
Masiello, who served as mayor from 1994 to 2005, qualified for the free insurance based on the white-collar contract in effect when he retired.
It’s not clear if Mayor Byron W. Brown would qualify for lifetime health insurance upon leaving office at the end of his second term in 2013 or if he would have to serve a third term to get the benefit. That’s because the AFSCME contract requires 10 consecutive years with the city to qualify for retiree insurance, while the City Charter specifies only 10 years, with no mention of consecutive. Since Brown served as a city councilman from 1996 to 2000, he would have the 10 years right now if they don’t have to be consecutive.
Under the current AFSCME contract, Brown’s start date also determines if his retiree health insurance would be free or would require a premium payment, and how much of a payment. That, however, could change in future years, as Buffalo, and other governments continue trying to eliminate or reduce retiree health benefits.
“As part of negotiations with every municipal union in Erie County government and just about every town, city, village and school district in Erie County, at the crux of those negotiations is lowering health care costs,” said John W. Greenan, Erie County’s personnel commissioner. “Those costs are clearly crushing municipal budgets.”

Collins cut benefit

In Erie County, former County Executive Chris Collins axed retiree health benefits for elected officials and top political appointments in 2010. That no-retiree insurance policy has continued under County Executive Mark C. Poloncarz.
But county policy for elected officials had yo-yoed in previous years, sometimes reflecting changes in union contracts and other times reflecting county executives’ example.
Erie County officials who retired before 2004, for example, paid 50 percent of their insurance premiums. That’s the deal that Thomas F. Higgins got when he retired as sheriff in 1998 and that Leonard R. Lenihan got when he retired as former legislator and personnel director in 2002.
“I left a few years before they got full health care,” Lenihan said. ”I‘ve been paying 50 percent. It costs a lot. It’s very expensive.”
Lenihan declined to say what he’s paying, but generally, a family policy is about $15,000 annually – so Lenihan would be paying about $7,500.
Two years after Lenihan retired, a newly negotiated CSEA contract guaranteed free retiree health insurance for union members, who in return agreed to replace traditional retiree insurance with a Medicare Advantage-based plan, sharply reducing county costs. The perk was then extended to elected officials and top managers.
That no-cost policy was in effect in 2005, when Swanick, Naples and Gallivan retired.
As sheriff, Gallivan received his free health insurance for life by virtue of being an elected official, but the former state trooper said he views the benefit as part of the employment package he entered into when going into law enforcement.
“I entered into employment knowing I would have a salary and certain set of benefits,” Gallivan said.
The retired sheriff, who is now a state senator, added that he is “very fortunate” to have retired at a time when the fully paid insurance benefit was offered, noting that the most recent sheriff’s deputies contract requires deputies to pay 15 percent of premiums on their retiree insurance.
Naples served as county comptroller for 12 years before resigning in 2005, when she began collecting a $12,400 annual pension as well as retiree health insurance for herself and her husband, businessman Thomas H. O’Neill Jr., who was already 65 and therefore eligible for Medicare. Naples did not respond to calls for comment.
O’Neill, like Masiello, likely pays the highest-level Medicare premium because he works at a high-paying job. O’Neill is chairman of the board of Union Drilling Inc., and founder of Somerset Production Company, a natural gas company.

An unusual example

Erie County requires employees to work for the county for at least five years, meet the state-established retirement age – usually 55 – and retire from county government to receive retiree health insurance through the county.
Calabrese, a deputy county executive from 2000 to 2005, resigned from his county position with five years on the job, at age 53. Two years later, when he hit retirement age, Calabrese was able to get retiree health coverage from the Town of Tonawanda. He worked part-time for the town while in college and full-time from 1986 to 2000, serving seven years as a councilman and then seven more as a town supervisor before joining former County Executive Joel A. Giambra’s administration in 2000.
“It was based on the rules of how long I worked there,” Calabrese said of his getting retiree insurance from the town, even though he wasn’t working for Tonawanda when he retired.
The collection of retiree health coverage from a government for which the individual was not working at the time of retirement appears unusual. It’s not allowed in Buffalo, Erie County or Amherst, according to officials in those three jurisdictions.
When Tonawanda Town Supervisor Anthony F. Caruana was called to discuss the town’s policy, he referred the inquiry to personnel director Eileen Fleming, who said the town’s health insurance program had been revamped in recent years and then further clarified this year to specify that retirement from town services is a condition of retiree health insurance.
Another town official, who did not want to be identified, said Tonawanda traditionally allowed supervisors to collect retiree health insurance as long as they met length-of-service requirements, regardless of whether they retired from Tonawanda. Calabrese’s retirement, he said, was allowed under that policy.

Paying a percentage

The Erie County policy that allowed Naples, Swanick, Gallivan and others to collect insurance for life changed in 2006 during the Giambra administration. Elected officials and top appointees hired before 2006 were required to pay 15 percent, while those hired after Jan. 1, 2006, had to pay 50 percent.
Four years later, Collins eliminated the perk altogether for elected officials and top management.
Giambra and Collins were trying to lead by example, hoping employee unions would agree during negotiations to give up retiree health insurance, or a least pay a bigger share.
AFSCME did. For members hired after December 2009, the county no longer offers retiree health insurance. CSEA and Teamsters were less impressed by the county’s argument. Their members continue to get fully paid retirees health coverage.
Other communities have also been cutting back on retiree coverage over the years.
Before 1977, most Amherst Town employees received health insurance for life. Today, only police, full-time elected officials and non-union employees hired before 2010 are eligible – and it’s not free. Retirees now pay 10 to 15 percent of premiums.
Currently, 549 employees receive health insurance from the town, costing a total of $6.5 million annually. Another 420 retirees receive the benefit, costing the town another $4.5 million annually.
The Town of Tonawanda does have more retirees than current employees receiving health coverage – 589 retirees versus 456 current employees. But the health coverage for existing employees costs more – about $5.2 million annually for retirees versus $7.5 million for current employees, according to figures supplied by the town.

Higher payroll costs

There is a flip side to eliminating lifetime health insurance. Health insurance costs prevent some veteran employees from retiring, McCarthy said.
“We are not going to be paying their retirement insurance, but while they are on the payroll, we are paying them more than we would be paying a new employee,” he said. “And from a human perspective, to send people out on the streets without health insurance in this economy, when insurance is so expensive, and they are going from premium health insurance to nothing – it’s kind of tough.”
Others argue that retiree health insurance should be retained for all families, as a way to help the middle class and, ultimately, the nation.
“There is a movement that wants to roll back a lot of gains of the past 60 or 70 years,” said Buffalo Council Member David A. Franczyk, who qualifies for free health insurance from the city when he retires. “They’ve destroyed pensions [including retiree medical coverage] in the private sector and are now trying to do it in the public sector. They are not raising the boat. They are lowering it.”