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
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.