States Aim Ax at Health Cost of Retirement

From The New York Times:

Governors and mayors facing large deficits have set their sights on a relatively new target — the soaring expense of health benefits for millions of retired state and local workers.

As they contend with growing budget deficits and higher pension costs, some mayors are complaining that their outlays for retiree health benefits are rising by 20 percent a year — a result of the wave of retirements of baby boomers and longer life expectancies on top of the double-digit rate of health care inflation.

Over all, the Center for State and Local Government Excellence found that 68 percent of city and county officials surveyed said they were pushing to have retirees assume more of their health costs, while 39 percent said they had eliminated or planned to eliminate retiree health benefits for new hires.

Governors and mayors are also tackling the fast-rising health costs for the nation’s 19 million state and local workers, often focusing first on the government employees who pay nothing toward their health premiums for individual plans in 14 states. That is a benefit few private-sector workers have.

In Oregon, Gov. John Kitzhaber, a Democrat, is demanding that state employees start paying part of their premiums. Oregon is the only state in which state employees do not contribute to any of their premiums for either family or individual health plans.

In Jacksonville, Fla., Mayor John Peyton is insisting that police and firefighters begin paying 5 percent of the premiums toward their individual health plans, and the police union is balking.

“In this budget crisis, taxpayers are becoming more concerned about where their tax payments are going,” Mr. Peyton said. “And many see a huge disconnect between what private-sector workers are getting on benefits and what the public sector is getting.”