Orange County Looks To Reduce Retiree Health Care Costs
Orange County faces $1.4 billion in unfunded liability for retiree health care benefits, and supervisors are considering several options to reduce costs, including freezing benefits or changing eligibility criteria, the Los Angeles Times reports. Combined with pension costs, the county's unfunded liability totals about $3.7 billion.
Increased medical costs and a large population of retired workers who are expected to live longer are contributing to the higher cost for the county. In addition, investment returns that support the funds have dropped over the past several years, falling to less than 1.5% in 2003 and 2004.
The county in 2005 contributed $19.5 million for retirees' health coverage and will pay $24 million this year.
Cost-saving options that supervisors are considering include:
- Moving the unfunded liability into a trust and off the county's books so it does not affect the county's credit rating;
- Splitting the pool of beneficiaries into active and retired employees, which would increase cost sharing for retirees; and
- Increasing the number of years a person must work or change the age requirements for an employee to be eligible for retirement benefits (Berthelsen, Los Angeles Times, 8/9).