Cost of OPEB (and Apathy)


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Union County Director of Finance Lawrence Caroselli shortly before he retired (with free lifetime health benefits).

State governments contributed $18 billion to their retiree health costs in FY2015,  42% of their annual required contributions, according to a new brief by the National Association of State Retirement Administrators (NASRA) and the Center for State and Local Government Excellence (SLGE) which ranks the states based on total Unfunded Actuarial Accrued Liabilities (UAAL) for these Other Postemployment Benefits (OPEB) and Percentage of State Spending with this warning:

FY 15 spending on OPEB in New York and California was below 2 percent, despite both states reporting relatively high UAAL and annual expenditures. By contrast, FY 15 spending on OPEB in Alaska and Hawaii was above 4 percent of spending, despite comparatively lower UAAL and annual expenditures in both states.

No such explanatory footnote for the state that is tops in both categories:

New Jersey

  • % of State Expenditure: 5.2% (highest of any state)
  • UAAL: $81,456,000,000 (higher even than California)

48 responses to this post.

  1. Posted by S Moderation Douglas on May 17, 2017 at 2:33 pm

    I was curious when this blog discussed retiree healthcare before, about the very high cost for retirees in New Jersey. I am not absolutely certain, but I understand that California state retirees, and local governments in CalPERS, have the same healthcare costs for retirees as for current workers. CalPERS negotiates a group rate with each participating insurance company so the costs are evenly shared by all age groups.

    In other words, younger workers are subsidizing older workers.

    If that is the case, it seems fair, because I was a younger worker once myself, supporting all the geezers… now I am the geezer.

    Reply

    • Posted by Anonymous on May 17, 2017 at 3:48 pm

      It seems strange, possibly unbelievable, that NJ healthcare costs are so high. At the “State” level premiums are not age dependent. In fact “premiums” are determined by actual claims for covered participants with Horizon, the plan administrator, receiving an administrative fee for claims processing.

      Reply

    • Posted by Anonymous on May 17, 2017 at 6:50 pm

      Quoting SMD ……..

      “In other words, younger workers are subsidizing older (PUBLIC SECTOR> workers. If that is the case, it seems fair”

      Ugh, NO. Fair is when PUBLIC SECTOR workers receive no more in Taxpayer healthcare subsidies (whether activate or retired) than what PRIVATE Sector workers typically receive in healthcare subsidies from their employers.

      And simply comparing one group of OVERCOMPENSATED (or over-subsidized) PUBLIC Sector workers to another group of OVERCOMPENSATED (or over-subsidized) PUBLIC Sector workers is just bogus BS.

      Reply

      • Posted by S Moderation Douglas on May 17, 2017 at 8:32 pm

        Ugh,

        Reply

        • Posted by Anonymous on May 18, 2017 at 9:35 am

          Previous posts indicate public sector workers account for ~15% of the workforce yet somehow their unions exert unusually power over politicians. I thought majority (electoral college) rules, just ask Hillary!

          Now we have a multi billionaire private sector non political POTUS with more baggage and self interest than any union or politician in recent history.

          But as anon aka tl states no more or better than the private sector – laughable! Their focus detracts from the prevalent inequities past and present.

          Reply

          • Posted by Anonymous on May 18, 2017 at 12:20 pm

            Hogwash/BS by someone (you) riding this Public Sector gravcy train.

          • Posted by Anonymous on May 18, 2017 at 1:09 pm

            Your comments resemble your remark – Garfield…..

          • Posted by Anonymous on May 18, 2017 at 1:17 pm

            Private Sector Pig, hogging all the bacon!!

          • Posted by S Moderation Douglas on May 19, 2017 at 11:52 am

            ” Previous posts indicate public sector workers account for ~15% of the workforce…”

            Sounds about right. I think that includes federal non military workers.

            I wonder if anyone has calculated what percentage of New Jersey (or any other state) citizens receive government paid healthcare benefits.

            How many “private sector workers” and their dependents are relying on healthcare (and retiree healthcare) paid for or subsidized by federal, state, and local governments (i.e. … taxpayers)?

          • Posted by Anonymous on May 19, 2017 at 11:47 pm

            AT LEAST double the Public Sector block-voting % (form the 15% which just represents the “workers”) after adding in their spoices/partners, voting age children, and parents.

            The Private Sector, which STUPIDLY has such a small voter turnout is overwhelmed by these self-interested MOOCHERS.

          • Posted by S Moderation Douglas on May 20, 2017 at 6:00 pm

            Except…

            Public workers don’t actually vote as a bloc…

            http://www.gallup.com/poll/146786/democrats-lead-ranks-union-state-workers.aspx

            And my spoices/partner asks me to mark her sample ballot so she can cancel all my votes.

            So much for “assumptions”.

          • Posted by Anonymous on May 20, 2017 at 7:47 pm

            Quoting SMD………

            “Public workers don’t actually vote as a bloc…”

            They may not vote as a Block on all issues or Candidates, but when anything threatens their pay or LUDICROUSLY excessive pensions & benefits, they sure do.

  2. Posted by skip3house on May 17, 2017 at 2:49 pm

    No reason for retiree health care costs. If retiring early, pay cost, if normal retirement, use Medicare…as rest of us are doing

    Reply

    • Posted by Anonymous on May 17, 2017 at 3:18 pm

      But it was promised ……..

      Reply

      • Posted by Anonymous on May 17, 2017 at 3:44 pm

        Which one and when, Trump promised not to touch Medicaid, Medicare, and SS. One down, two to go!

        Reply

        • Posted by Anonymous on May 17, 2017 at 4:11 pm

          Once the impeachment starts and the market gets cut in half ….more to worry about than healthcare …….can a pension short the market ?

          Reply

          • Posted by Anonymous on May 17, 2017 at 4:22 pm

            I’d think the market would react positively to such news!

          • Posted by Anonymous on May 17, 2017 at 5:18 pm

            don’t back that thought with money because it will be a slow bleed down think Nixon it took us 10 years to get back to normal ,that said I don’t believe DT will be impeached on what they’ve shown so far …that bar is set so low unless of course he gives a hostel nation nuclear capabilities …Oh wait

    • Posted by PS Drone on May 17, 2017 at 8:06 pm

      There is no such thing as “normal” retirement with drones. Try age 52 or 55 or 58 and when they do “retire” after their grueling 20, 25 or 30-year “career” they expect free medical care until Medicare kicks in. Then they demand that the taxpayer pay the Medicare premiums. Can’t wait for the money to run out and the wailing to begin.

      Reply

      • Posted by Anonymous on May 17, 2017 at 9:29 pm

        Perfectly accurate description !

        Reply

      • Posted by Anonymous on May 17, 2017 at 10:25 pm

        And yet another turnover on a double dribble!

        Reply

      • Posted by S Moderation Douglas on May 18, 2017 at 10:54 am

        “… age 52 or 55 or 58…” for safety workers.

        Non safety government employees retire at about the same age as private sector workers.

        Reply

        • Posted by Anonymous on May 18, 2017 at 12:27 pm

          When full-career Public Sector workers “retire”, they walk away with a DB pension worth 2 to 4 (4 to 6 for safety workers) greater than that typically granted similarity situated Private Sector workers……………. almost always, not occasionally.

          And when Private Sector workers “retire” early, it’s often because they NEED TO, but can no longer find a job.
          **************************************

          To imply that Private and non-Safety Public Sector workers retire at the same age …… ON AN EQUAL FOOTING …….. is preposterous.

          Reply

          • Posted by S Moderation Douglas on May 18, 2017 at 5:33 pm

            “And when Private Sector workers “retire” early, it’s often because they NEED TO, but can no longer find a job.”
            **************************************
            For over twenty consecutive years?

            “The average age retired Americans report actually retiring has always been lower than nonretirees’ expected age of retirement, and is 60 in this year’s survey (2015), matching the average generally found since 2004. Prior to that, the average reported age of retirement was always below age 60.”

            http://www.gallup.com/poll/182939/americans-settling-older-retirement-age.aspx

            ” The vast majority of those who plan to stop working say it is because they want to rather than will need to. Also, by a better-than 2-to-1 ratio, those who plan to continue working part time say it is something they want to do, rather than will have to do.”

            http://www.gallup.com/poll/210044/employed-adults-plan-work-past-retirement-age.aspx
            …………………………………………………………………….
            “When full-career Public Sector workers “retire”, they walk away with a DB pension worth 2 to 4…yadda, yadda, yadda… ”

            Many of these public workers earned lower wages than equivalent private sector workers. Not “a few at the top”, but many.

            Monique Morrissey:

            ” The more compressed pay structure—with top and bottom pay closer together—reflects the fact that people are drawn to public service for nonpecuniary reasons and that government employers have an interest in setting a higher floor on compensation than private-sector employers, some of whom pay poverty-level wages and pass health care and other costs onto government programs. Because public-sector workers are more likely to have college degrees, public employers—and taxpayers—are getting a bargain while ensuring a decent standard of living for less educated workers.”

          • Posted by Anonymous on May 18, 2017 at 6:39 pm

            Quoting SMD ……… “For over twenty consecutive years?”

            No, for far far LONGER.

          • Posted by Anonymous on May 18, 2017 at 6:59 pm

            SMD, The is no justifiable basis for ……..”ensuring a decent standard of living for less educated [Public Sector workers] workers.”

            Taxpayers owe them no more than a Total Compensation package” EQUAL to what they would earn in a comparable Private Sector job.

            If that is not sufficient to provide food/shelter/clothing/etc., they should seek out Social Services ….. JUST AS WOULD A PRIVATE SECTOR WORKERS IN THE IDENTICAL SITUATION.
            *************************************************************
            Public Sector workers are NOT ‘special” and deserving of a better deal …. on the taxpayers’ dime.

  3. Posted by Anonymous on May 18, 2017 at 12:18 pm

    What an obnoxious, self-congratulatory putz !

    Reply

  4. Posted by Anonymous on May 18, 2017 at 1:53 pm

    Off Topic….. but ANOTHER HUGE taxpayer ripoff:

    http://money.cnn.com/2017/05/18/pf/college/betsy-devos-public-service-loan-forgiveness/index.html

    What makes Public Sector workers so “special” that the deserve a special and better deal …on the TAXPAYERS’ dime ?

    Reply

    • Posted by Anonymous on May 18, 2017 at 2:26 pm

      Oh so it’s ok when it suits you to expand the topic and include Federal and military workers – what a pompous bigot!

      Reply

  5. Posted by MJ on May 18, 2017 at 4:15 pm

    Why is it that when TL and SMD are on this post that name calling starts and why is it that every post somehow turns into something about Trump????? UGH!!!

    Reply

  6. Posted by dentss dunnigan on May 19, 2017 at 9:48 am

    Great article in the WSJ about the realization by the democrat Connecticut gov that the rich in that state are all but tapped out and they can’t go back to that well yet again to close their budget deficit. That once lovely state is now in dire financial straits, because they taxed and taxed and have chased away their golden geese.

    Reply

    • Posted by S Moderation Douglas on May 19, 2017 at 11:22 am

      They may be tapped out on taxing the poor, also. And the “middle class”.

      http://www.itep.org/whopays/states/connecticut.php

      ” The bottom line is that many so-called “low-tax” states are high-tax states for the poor, and most do not of­fer a good deal to middle-income families either. Only the wealthy in such states pay relatively little.”

      http://www.itep.org/whopays/full_report.php#The 10 Most Regressive State & Local Tax Systems

      ” The main finding of this report is that virtually every state’s tax system is fundamentally unfair. The overreliance on consumption taxes and the absence of a progressive personal income tax in many states neutralize whatever benefits the working poor receive from low-income tax credits. The bleak reality is that even among the 25 states and the District of Columbia that have taken steps to reduce the working poor’s tax share by enacting state EITCs, most still require their poorest taxpayers to pay a higher effective tax rate than any other income group.”

      Reply

      • Posted by skip3house on May 19, 2017 at 2:48 pm

        “bout time, after 3 dozen comments, someone tells it like it is for the great bulk of us…less that top 1.01%.
        Ike knew debt was bad, kept taxes high on wealthiest, then LBJ allowed ‘surplus’ Social Security to be used for that war instead of taxing more from the people involved then. Now, we have our present/future taxpayers being sunk under by services incurred by our past.
        Some point,( maybe after your comment? ) we will disown old debts really owed by past generations, and start fresh?
        Keep in mind the $600Billion used for public schools yearly would be ‘free’ if only we did not have to support the National Debt for that same amount !

        NJ mean income is about $50K, its average though is $85K. Shows the much greater wealth of that 1.01% to raise mean (half population) .

        Reply

    • Posted by Anonymous on May 19, 2017 at 11:48 am

      Yup, and it’s not just rich “individuals”.

      General Electric left CT last year specifically because of the high (and clearly soon to be even higher) taxes.
      ********************************

      Keep promising the Public Sector workers the sun, the moon, and all the stars in the sky in pensions and benefits, and the only residents who will remain will be the Public Sector workers, and those on welfare who get free services but don’t pay taxes.

      Reply

  7. Posted by S Moderation Douglas on May 19, 2017 at 7:23 pm

    If only it were so simple…

    “Clearly, tax avoidance isn’t the only thing that GE is good at. It’s a pro at wringing government subsidies in exchange for jobs. Call it extortion, corporate blackmail or piracy, it’s a destructive drain on states.”

    http://www.courant.com/opinion/editorials/hc-ed-ge-destructive-subsidy-game-20160115-story.html

    Add to the irony, how much of both these large “private sector companies” profits come from military contracts? (i.e. “taxpayer money”.)

    Reply

  8. Posted by Anonymous on May 19, 2017 at 8:42 pm

    Even if true, that does N OT justify unnecessarily OVERCOMPENSATION Public Sector workers.

    Reply

  9. Posted by Anonymous on May 20, 2017 at 2:14 pm

    Fair and equal, not sure about the different systems mentioned and its’ membership. It’s time for comprehensive national reform with State and Local governments following Federal benefit guidelines. Which probably unnecessary and certainly unjustified, additional employer (hybrid) DC benefits can be offered.

    http://www.fedweek.com/fedweek/trump-budget-seek-cuts-retirement-benefits/

    Reply

  10. Posted by S Moderation Douglas on May 21, 2017 at 1:49 pm

    Meanwhile, back at the OPEB (and Apathy)

    For better or for worse, the “government” has encouraged and/or legislated Equal Opportunity in hiring for women, minorities, and the handicapped. And they lead by example. They also encourage and/or mandate other labor relations rules such as minimum wage, OT, unemployment insurance, etc. Again, they lead by example.

    “Government” (taxpayers) also encourages and/or subsidizes (through tax exemptions) businesses in supplying healthcare insurance (and retiree healthcare). Government leads by example. Through economies of scale, and risk sharing, either business or government can greatly reduce the cost of healthcare. Although private sector healthcare, and​ especially retiree healthcare, has been diminishing in the last decades, eliminating healthcare for public workers can only make it worse.

    And increase the costs for those companies who do still provide insurance. As in my question above…

    “How many “private sector workers” and their dependents are relying on healthcare (and retiree healthcare) paid for or subsidized by federal, state, and local governments (i.e. … taxpayers)?”

    In California, from CalPERS alone, it appears there are over 1.4 million “total covered lives”. 152,000 of those are retired, on basic healthcare, and 293,000 are on Medicare supplement. That is a lot of money. But if you cut down costs here, they will show up somewhere else…

    1) Increased costs to employees (and retirees)
    2) Increased costs to private sector business healthcare costs. (For about a dozen years, our family was on my wife’s insurance, because it was better and cheaper than state coverage.)
    3) Increased social welfare costs.

    There are many other county and City retirement systems in California, adding much more healthcare cost (or benefit, depending on your perspective).

    Reply

  11. Posted by Anonymous on May 21, 2017 at 7:43 pm

    Quoting SMD………

    “Although private sector healthcare, and​ especially retiree healthcare, has been diminishing in the last decades, eliminating healthcare for public workers can only make it worse. “?

    How does the the first half of your above-quoted sentence (ending with “decades”) or any of your commentary that preceded that sentence lead to the conclusion that you make in the 2-nd have of that quoted sentence, that ….”eliminating healthcare for public workers can only make it worse. ”

    What or who is the “it” in that part of your quote.

    Sure, “IT” will make it MORE EXPENSIVE for Public Sector workers/retirees, hopefully costing them an amount EQUAL to what it now costs most Private Sector workers/retirees.

    That’s not making it “worse” …. its making it “fair”.

    Reply

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