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Home Publications Blogs Beat the Press New York's Bill for Retiree Health Care: Denominator Please

New York's Bill for Retiree Health Care: Denominator Please

Wednesday, 13 October 2010 04:07

The NYT reported that state, local, and county governments in New York face a liability of $200 billion for retiree health insurance payments. These governments have not budgeted for this liability.

It would have been helpful to include a measure of future income so that readers could assess the importance of this cost. If New York State grows at roughly the same rate as the overall economy, then its total income (discounted at a 4.5 percent rate) would be over $37 trillion. This puts the unfunded liability for health care for New York's public sector employees at approximately 0.5 percent of income. 

It is also worth noting that much of this cost is due to the projection that health care costs in the United States will continue to grow at a pace that is far out of line with growth in the rest of the world. If the country were to adopt free trade policies in health care, then this cost could be drastically reduced. In other words, if U.S. trade policy was not so protectionist in this area, state and local government retiree health care costs would be far more affordable.

The article also includes comments that retirees can get full health care benefits as early as age 55. It would have been worth mentioning that this only applies to workers who have worked 30 years or more, which is not most workers.

Comments (5)Add Comment
Not just a denominator missing
written by John H. McCloskey, October 13, 2010 6:36
(A) "Beat the Press" is a fun game, but once in a while it is necessary to play "Let's Bean Dean" a little. As when the good doctor follows his patients' bad example and refuses to say anything about what time frame that $205,000,000,000.37 is supposed to be spent over.

(B) Lurking in the background [http://j.mp/9z1VRD] of this one is something called GAS B-45, which must be rather more toxic than Sarin, or even carbon dioxide itself. We might have been told about it?

(C) On the political front, more important to me, it is nice to learn that the nonpartisan Hooverville solution is repudiation, or call it "breach of contract":

“The good news for New York taxpayers is that public-sector retiree health benefits, unlike pensions, are not guaranteed by the state Constitution,” said author E.J. McMahon, a senior fellow with the Empire Center [for New York State Policy] and the Manhattan Institute. “Elected officials can still change course on retiree health care by restructuring benefits for both current retirees and active employees.”

(( "How about that, General Hamilton?" ))

Happy days (through affordable health care)!
The Real Fiscal Problem
written by libhomo, October 13, 2010 7:11
Rich people and corporations aren't paying anywhere near their fair share in taxes. The NYTimes heavily censors coverage of that.
written by jamzo, October 13, 2010 10:11
philadelphia inquirer had similar article by "northwestern and rochester u economists"

to me it looks like a stealth program attacking defined benefit programs

state and local governments are the last market segment for defined contribution programs

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.