NCPA - National Center for Policy Analysis


June 24, 2009

Free health care for life is a prized benefit of public employment, but its rapidly rising cost to taxpayers is looming into view, thanks to the phasing in of a national accounting rule known as GASB-45.  The rule, issued in 2004, applies to towns, villages, school districts and public authorities, requires a 30-year cost of retiree health benefits to be listed on annual financial reports.  This year, for the first time, governments with as little as $10 million in revenue will begin reporting those costs in their financial statements, despite the fact that they are not required to set aside money to cover those costs, says Newsday.

New York State has the highest costs in the nation for retired employees' medical care -- an estimated $55 billion over the next 30 years. It, too, paid more last year for retirees' health benefits than their pension costs. Those health costs are only going to up, says state Comptroller Tom DiNapoli, who has proposed creating a trust fund governments can use to save for their retirees' health costs.

But at the moment, county officials seem more interested in finding ways to reduce the obligations than set aside extra money to meet them, says Newsday:

  • Over the next 30 years, Nassau County expects to spend $3.6 billion paying health care bills for its retired workers.
  • Already this year, it spent more for retirees' health care than it did for their pensions.
  • Suffolk County faces an even higher liability -- $4.1 billion over 30 years, and County Executive Steve Levy is looking to trim benefits and blamed the current predicament on a series of nine government downsizings approved by the legislature in eight years that were followed by new hires.

Source: Elizabeth Moore, "Public workers' free health care hangs over taxpayers," Newsday, June 23, 2009.


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