More Economic News

[clarencebunsen]

N.Y. Faces $200 Billion in Retiree Health Costs

www.nytimes.com/2010/10/13/business/13retire.html?th&emc=th

The cities, counties and authorities of New York have promised more than $200 billion worth of health benefits to their retirees while setting aside almost nothing, putting the public work force on a collision course with the taxpayers who are expected to foot the bill.
...
But the report casts serious doubt over whether medical benefits for New York’s retirees will be sustainable, given the sputtering economy and today’s climate of hostility toward new taxes and taxpayer bailouts.
...
The health benefits are entirely separate from the pensions that New York’s public workers have earned. Governments have reported their pension obligations for years, but their retiree medical obligations have been building up unseen, because governments were not required to account for them. The information is starting to come to light because of a new accounting requirement.

One city, Schenectady, found the cost too overwhelming to calculate, warning that it “will be astronomical, with the potential of bankrupting municipalities.”

Of course we will continue to vote for the same cast of characters as last time or make a big leap and elect some member of the ruling class to a higher office than last time.

[clarencebunsen]

[dgriffin]

I suppose we should consider that the state signed union contracts that should be honored and it is the insurance companies that are raising the rates, resulting in astronomical projected health care costs. The insurance companies can claim increased health care costs to some extent, but the recent raising of rates in anticipation of Obamacare is not justifiable. Unless you're a businessman.

Given all of that, it is the sheer number of public employees that is daunting. Public buildings grow wider and taller to hold them, parking lots are added on to accommodate their cars. In some towns, like mine, public employees are probably the best paid of all workers.

[clarencebunsen]

One of the things we've seen done in Utica (and I assume other cities) is to use generous future health care provisions as a bargaining chip when negotiating current salaries. That way it can be someone else's problem. As long as it doesn't have to be funded or reported as a liability no one cares.

[dgriffin]

Yup, done all over the place. The School board doesn't want to announce they gave the teachers a certain percentage raise, so they sweeten health benefits and snip some off the pay raise. Or lower the employee contribution, which kicks up the paychecks and sneaks by hiding under the skirts of a smaller percentage raise. Retirement benefits, too. These are especially effective in the bargaining process because the influential teachers doing the bargaining and are often older and thinking about future pensions. That's also one reason most of the contract raise goes to the older teachers, not the young poor ones.

[dgriffin]

Here's the report CB cited above:

www.empirecenter.org/Special-Reports/2010/10/icebergahead101310.cfm