Tuesday, January 30, 2007

Public Employees & Health Care

Besides the obvious results for the public budget, this move also continues the growing parity between public and private employment that has good and bad consequences.

Daniel Weintraub: Sacramento County faces retiree health squeeze
By Daniel Weintraub -
Published 12:00 am PST Tuesday, January 30, 2007

Today the Board of Supervisors in Sacramento County is scheduled to confront an issue with which government agencies across California and the nation will soon be grappling: the long-term cost of health benefits for retired public employees.

Unlike most private employers, most public agencies in California subsidize the medical insurance of employees who retire before they turn 65 and become eligible for the federal Medicare program. But few of those agencies have set money aside to cover the cost of their retirees' insurance. As more employees retire and draw on that benefit, and as health care costs increase, the costs are growing.

For years these public agencies were able to ignore their looming liability. They simply paid the ever-increasing cost each year and figured they'd find a way to pay the bigger bill the following year as well.

But a recent change in government accounting rules requires public agencies to estimate the cost of these unfunded benefits stretching into the future. And once that cost is estimated, the agencies will face increasing pressure to set money aside to pay for the obligation -- or else do something to reduce it.

In Sacramento, county officials are recommending a combination of both remedies.