Prefunding Retiree Health Benefits Could Save California $17B
California Controller John Chiang (D) is calling on lawmakers to nearly double its annual contributions to retiree health care benefits to build an investment fund that would help offset the long-term cost of the benefits, the San Francisco Chronicle reports (Buchanan, San Francisco Chronicle, 2/26).
A report Chiang released yesterday estimates that providing health care and dental benefits to retired state workers will cost California $48.2 billion.
California currently does not prefund retiree health care benefits; it simply pays what is due each year (California Healthline, 2/25).
The report projects that by refunding retiree health benefits, the state could save $17 billion over the next 28 years (San Francisco Chronicle, 2/26).
Reflecting on the report Chiang released yesterday, an Orange County Register editorial states, "Unfortunately, long-range planning isn't the Legislature's strong suit, as evidenced by its annual budget debacles."Rather than simply prefunding benefits, the editorial argues that it might be beneficial to push back the eligibility age for retiree health care benefits for new state workers (Orange County Register, 2/26). 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.