San Diego Could Reduce Retiree Health Spending Through Ballot Initiative
On the Nov. 2 ballot, San Diego residents will have the option to approve Proposition D, part of which would reduce spending on lifetime health care coverage for retired city workers, the San Diego Union-Tribune reports.
The ballot measure contains 10 conditions that must be met for a proposed sales tax increase.
If approved, one of those items might reduce taxpayer spending by hundreds of millions of dollars by lowering the cost of retired city workers' health benefits.
However, the ballot measure does not provide a specific dollar amount that the city must save, so the proposition's requirement could be met by simply reducing spending by one dollar (Gustafson, San Diego Union-Tribune, 10/15).
In 1982, then-Mayor Pete Wilson (R) established the health care benefit as part of an exchange for city employees who opted out of Social Security. The plan aimed to reduce city costs immediately and across the long term (California Healthline, 9/2).
Over the past 30 years, San Diego has generally used a pay-as-you-go system to operate the benefit plan. The city rarely set funds aside for the program's future.
Action To Cut Costs
Officials eliminated the retiree health care benefit for employees hired after July 1, 2005.
However, it remains unclear whether workers hired before the cutoff are eligible for the benefit.
Last year, a federal court of appeals ruled that the city's retiree health benefit program is not vested for current workers and could be changed. Labor union members do not agree. If the program is eliminated, a lawsuit would likely result, according to the Union-Tribune.
Currently, the city is negotiating with labor unions about potential changes to retirees' health care. One option could be to cap benefits at the current $8,800Â annual cost,Â which would reduce San Diego's deficit by $400 million.
Reducing the Deficit
Although the city has saved about $75 million for future retirees' health care costs, it still falls $1.28 billion short in meeting estimated costs (San Diego Union-Tribune, 10/15).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.