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Reforming Retiree Rx!!! 9-10-12
Posted On: Sep 10, 2012

NY Post 9-10-12

Reforming retiree Rx

Last Updated: 12:46 AM, September 10, 2012

Posted: 10:38 PM, September 9, 2012

Local and state governments face a $250 billion unfunded liability from the cost of health-care coverage promised for retired public workers, according to a report released last week.

As the Empire Center for New York State Policy study notes, the bulk of New York’s 1.3 million state and local employees get lifetime subsidized health-care coverage.

New York City alone faces an $84 billion liability for outstanding retiree coverage. The cumulative costs of coverage for other cities, counties, school districts, etc., is $74 billion; the liability for retired state employees is $73 billion, and so on.

True, the entire $250 billion won’t have to be paid at once, but the promised benefits eventually must be paid — and the costs grow by 8 percent to 10 percent a year.

That’s one more big-ticket item for annual budgets.

And it’s ultimately unsustainable.

As the costs metastasize, municipalities will have only two choices — hike taxes or cut funding for infrastructure or essential services, such as cops, firefighters and teachers.

Fortunately, as the Empire Center’s Russell Sykes wrote in these pages Friday, common-sense options exist to help reduce these liabilities.

One suggestion is ending retiree coverage for new and recently hired employees while requiring those already working to take more responsibility for their own post-employment coverage.

Other options exist as well.

For example, most private-sector retirees pay a nominal $100-a-month premium for coverage of Medicare Part B — the part of the program that covers physicians’ services, outpatient hospital services, home health services, etc.

New York City and New York state, however, reimburse their retirees for their premiums — even though those same individuals have far more generous pensions than those found in the private sector.

Idea: How about just stopping the Medicare Part B reimbursements?

That alone would make a slight dent in the outstanding obligations that those governments have — while helping put public-sector retirees on the same level as their private-sector peers.

Regardless, the liabilities must be addressed before obligations of the past continue to eat up the services of the present.


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