Cost of Retiree Health Benefits Drawing Scrutiny
An actuarial firm is working to estimate the cost to California of health care benefits for future state retirees, the San Francisco Chronicle reports.
A 2004 rule by the Governmental Accounting Standards Board requires states and other large public agencies beginning in 2008 to disclose retiree health care liabilities that Medicare will not cover. Smaller public agencies must begin disclosing their liabilities earlier.
The rule does not require public agencies to begin funding the liability, only to report in their financial statements what the costs are.
The Legislative Analyst's Office estimates that the state government will face liabilities of $40 billion to $70 billion. According to the Chronicle, government agencies could have to reduce funding for other programs in the future if they do not address future retiree health care costs adequately.
H.D. Palmer, a spokesperson for the Department of Finance, said the actuarial report is part of the state's planning efforts to address the costs.
A report by the California HealthCare Foundation estimates that California taxpayers will pay $80 billion to $140 billion over 30 years for health care benefits for retired state and local government workers (Gledhill, San Francisco Chronicle, 11/13).