According to a New York Times story yesterday retiree health benefits for public employees are endangered. Yet that’s not what one county’s CFO told his bosses only last year.
Local Governments Take Budget Knife to Retiree Health Plans
As cash-strapped U.S. cities and states struggle to address gaping budget holes, a long-honored benefit for public-sector workers has come into the cross-hairs of budget cutters: retiree health insurance.
A growing number of states and cities are eliminating or reducing health coverage for retirees, a benefit that has long fallen by the wayside for most private-sector workers.
But the coverage, which has meant that most retired public workers have all their medical bills fully paid, is expensive and hugely underfunded. And because health coverage does not typically have the strong legal protections that hamstring changes to public pension benefits, it is easier for governments to scale back.
The trend could leave millions of public workers with thousands of dollars in unanticipated healthcare costs.
“In 20 years, very few people will have this benefit,” said Dennis M. Daley, a public management professor at North Carolina State University in Raleigh, North Carolina.
New York Times, October 15, 2012
Yet in 2011 when Union County decided to cover 100% of retiree health benefit costs for approximately 650 non-union employees the board of freeholders were told by then Chief Finance Officer and soon-to-be retiree, Lawrence Caroselli:
And the board bought it.
For a fascinating insight into how this lifetime-health-benefit giveaway came to light: