Snapshot: Benefits in the Balance: The Uncertain Future of Public Retiree Health Coverage

Publication Date: September 2006

Publisher: California HealthCare Foundation

Author(s): Katherine B. Wilson

Research Area: Health

Type: Brief

Abstract:

Beginning in 2007, a new government accounting standard will require public sector employers to estimate and report the cost of future retiree benefits. In many cases, this will reveal large and rapidly growing unfunded liabilities. It will also likely lead to new scrutiny of the trade-offs between spending on retiree health care versus other spending priorities, and will raise questions about the future of generous retirement benefits for public sector workers. To help stimulate discussion about this emerging issue, this snapshot provides an assessment of current and forecasted retiree health care spending by counties, cities, school districts, state government, and special districts. It also includes data on the characteristics of public sector retirees and the benefits they receive. It draws from multiple sources, including a CHCF-commissioned analysis of public sector retiree health spending by the Center for Government Analysis (CGA) (available at CGA's Web site below). The snapshot reports that most public agencies have taken a "pay-as-you-go" approach, opting to pay as bills come due rather than setting aside funds to pay for future benefits. However, an aging workforce, increased life expectancy, and rising health care costs may make this an untenable approach. In addition to the snapshot, a resource page offers additional references for learning more about retiree benefits. The data table provides key data points for every agency studied in the CGA report as well as four illustrative case studies. These publications are available under Document Downloads below.