NCPA - National Center for Policy Analysis


August 7, 2007

The cost of retiree health benefits for San Jose government workers is ballooning as premiums soar and city officials grapple with a $1.14 billion budget deficit they say is no longer sustainable.


  • Currently, retired San Jose workers who choose the city's cheapest health plan --Kaiser Permanente -- pay nothing in premiums for family coverage or co-payments to visit the doctor or emergency room.
  • The city pays $1,002 per family per month for that benefit, money the retirees can apply to more expensive plans if they opt not to go with Kaiser.

Those costs are much higher than surrounding areas, say observers.  For instance:

  • Santa Clara County provides its retirees the monthly Kaiser rate for single rather than family coverage -- $418.81.
  • If retirees want to cover their dependents, that comes out of their own pockets.
  • Other cities such as Fremont pay a fixed monthly amount -- $170 for one of Fremont's larger employee groups -- so the city's costs don't automatically rise along with premiums.

Options San Jose may consider include reducing the amount the city pays for coverage or requiring more years of service to qualify, say observers.  The city may even explore the legality of reducing benefits for San Jose's 4,100 current retirees as well as for current workers.

Source: John Woolfolk, "San Jose to tackle retiree health costs," San Jose Mercury News, August 6, 2007.


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