Study: L.A. Has Best-Funded Retiree Health Care Among Large Cities
Los AngelesÂ sets asideÂ the largest percentage of funding for future retirees' health care benefits of any large city in the U.S., according to a study from the Pew Center on the States, Capitol Weekly reports.
For the study, researchers studied 61 cities that had more than 500,000 residents or were the largest city in the state.
Most cities pay health care costs for current retired workers on an annual basis, with little or no funding set aside for benefits promised to current workers when they retire.
Critics of the "pay-as-you-go" approach argue that it forces future generations to deal with accumulated debt, meaning current workers might not have access to the same health care services as current retirees.
The study found that health care benefits for future retired Los Angeles workers were 55% funded in 2009.
Researchers wrote, "Far earlier than most, Los Angeles began setting aside money for retiree health insurance in 1987, and the city has been praised by the bond-rating agencies for this practice."
According to the study, Denver provided the second-highestÂ percentage of funding for future retired workers' health care benefits, at 51%. Washington, D.C., provided the third-highestÂ percentage of funding for future retired workers' health care benefits, at 49%.
Findings for Other Calif. Cities
According to the study, other large California cities in 2009 contributed significantly less to retiree health care benefits.
It found that:
- San Jose workers' retiree health care benefits were 9% funded;
- San Diego workers' retiree health care benefits were 3% funded; and
- San Francisco workers' retiree health care benefits were less than 1% funded.
Growth in Retirement Costs
Capitol Weekly reports that while Los Angeles provides substantial funding for future retiree health care benefits, it also has seen significant growth in retirement costs.
Former Mayor Richard Riordan (D)Â and other officials said city retirement costs have doubled in the last seven years to more than 18% of the general fund. They estimated that retirement costs could reach 25% in the next four years.Capitol Weekly reports that if Los Angeles were not setting aside funding for future retiree health care benefits, the percentage of the general fund made up by retirement costs would be much smaller (Mendel, Capitol Weekly, 1/24). 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.