Cost of Retiree Health Benefits Set To Increase
Retiree health care costs for public sector employers in California will increase from $3.9 billion in 2006 to $31 billion by 2020, according to a report released Tuesday by the California HealthCare Foundation, the Financial Times reports. The report attributes the increase to:
- An aging population;
- Longer life expectancy; and
- Inflation.
As retiree health care costs increase, the report says that some public sector employers might have to reallocate some funds to cover the cost of the benefits (Garrahan, Financial Times, 9/26). Retiree health care benefits currently account for about 1% to 3% of many public agencies' budgets.
For example, the California state government in 2006 will spend about $1 billion, or 1% of the state general fund, on retiree health care. The report finds that the state would have to contribute $6 billion annually for 30 years to fully fund retiree health care obligations (California HealthCare Foundation release, 9/26). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.