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The Soaring Public (employee) Health Tab

Original post made by Soaring Public Employee Medical Costs on Aug 2, 2011

From the WSJ

Government pension liabilities have been in the news, but an even more urgent problem is the skyrocketing cost of health benefits. That's the gist of a new study by Josh Barro of the Manhattan Institute which finds that health-care costs for local and state governments have tripled in 15 years, outpacing the growth in private insurance premiums by about 20%.

Governments typically offer a choice of several managed care plans that include comprehensive medical coverage and supplemental benefits like vision and dental care. Governments are also three times more likely than business to provide retiree health insurance. Many companies stopped covering retirees in the 1990s when the Financial Accounting Standards Board began requiring them to report these liabilities on their balance sheets. Governments have since accrued a $1 trillion unfunded liability.

Businesses are passing some of the rising premium costs to workers, but governments are reluctant to do the same...


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Comments (11)

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Posted by hypochondriac
a resident of Another Pleasanton neighborhood
on Aug 2, 2011 at 2:09 pm

More from the WSJ:

Public employees on average pay 15% of their premiums compared to 25% for their private counterparts. About a dozen states don't require workers to contribute anything. So how are governments paying for these benefits? Property taxes, which readers may have noticed keep going up.

In the dozen or so states with property tax caps, local governments and school districts are finding savings by modifying their health plans... (I don't see it - at least not on any meaningful level)

But a better solution would be to offer consumer-driven plans that encourage workers to use health resources more judiciously since they must pay higher out-of-pocket expenses. Such plans are becoming more common in business because they yield huge cost savings to both employers and employees. Whole Foods CEO John Mackey wrote in these pages in 2009 that his company's high-deductible plans, which include a lump-sum contribution to a health savings account (HSA), have held down his company's health-care costs.

Web Link

Retiree medical benefits for people that can retire at 50 or 55 is a separate but more offensive issue.


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Posted by taxpayer
a resident of Downtown
on Aug 2, 2011 at 5:11 pm

It's time for the city to start negotiating with the PD for a new contract. Write to all of the city council members to remind them that it is well past time for the PD employees to be making their contribution to the pension. They can retire at age 50 with 90% of their final pay -- that is a pay raise when they spike the last year -- and they get free medical benefits for life. They have thus far contributed nothing to those pensions.
After retirement at age 50 they can take a full time job and still collect all of their pension. The pension must be reduced dollar for dollar by anything else that they earn.
The fire dept agreed to pay a miniscule portion of their pension contribution. It is time for the FD and the PD to pay ALL of the pension contribution. It is also time for them to pay for the medical benefits after retirement. I have no problem paying a fair wage for WORKERS but I will never agree to this taxpayer rape of age 50 retirement with fully paid benefits.


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Posted by ?
a resident of Another Pleasanton neighborhood
on Aug 2, 2011 at 6:00 pm

Taxpayer, nice post but where did you come up with this: The pension must be reduced dollar for dollar by anything else that they earn.

To the best of my knowledge that isn't true. Do you have a link?


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Posted by John
a resident of Pleasanton Heights
on Aug 2, 2011 at 7:31 pm

"It's time for the city to start negotiating with the PD for a new contract. Write to all of the city council members to remind them that it is well past time for the PD employees to be making their contribution to the pension. They can retire at age 50 with 90% of their final pay -- that is a pay raise when they spike the last year -- and they get free medical benefits for life. They have thus far contributed nothing to those pensions."

I agree!


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Posted by hummm
a resident of Another Pleasanton neighborhood
on Aug 2, 2011 at 7:59 pm

The only thing I see in the future is the gravitational pull of high costs and not enough revenue. Economic physics just doesn't play ball with our view of the world. (CRASH!)


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Posted by To: taxpayer
a resident of Amador Estates
on Aug 2, 2011 at 8:22 pm

""It's time for the city to start negotiating with the PD for a new contract. Write to all of the city council members to remind them that it is well past time for the PD employees to be making their contribution to the pension. They can retire at age 50 with 90% of their final pay -- that is a pay raise when they spike the last year -- and they get free medical benefits for life. They have thus far contributed nothing to those pensions."

It is much more ridiculous than you imagine. The pension payout for a 30 year employee is 99% of W-2 compensation. That 99% of compensation equals a first year retirement wage of basically a full salary with a healthcare payment of about 14K per year for the employee + spouse for retiree healthcare. Looking at the long term trends in the very generous healthcare package tha employees receive during retirement, the 1400 per month cost will increase by about 8% annually. On top of that the pension will increase by 2% annually, meaning that the employee's highest earnings are received in the second year of retirement - until the third year of retirement. Pleasanton is only a few steps away from providing a a 50 something with a pension of over 200K, assuming it hasn't already happened.

Every career public safety employee will receive an initial pension in excess of 100K, that includes lifetime medical, at the taxpayer expense.


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Posted by taxpayer
a resident of Downtown
on Aug 2, 2011 at 8:49 pm

"Taxpayer, nice post but where did you come up with this: The pension must be reduced dollar for dollar by anything else that they earn."
Guess I was not clear on this -- pensions are not currently reduced but this change needs to be made. If a retired cop or firefighter takes another job after their full taxpayer funded retirement kicks in, the pension should be reduced by every dollar of earnings.
The pension system for FD and PD is insane and cannot be allowed to continue. They pay nothing in during their careers. They retire at age 50 with as much or more likely even more money than they made when working. They get COLAs for their lifetimes. They get free medical benefits for their entire family. Most of them scam a so-called disability pension so that they pay no Federal or state tax on any of their pensions. Those same people who are too "disabled" to work are on the golf course every day. I personally know of one in Pleasanton who competes in many triathlons but retired with a "bad back". Tax free income that exceeds what they made as workers.
Are you tired of paying for that? Let your city council and state representatives know.


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Posted by To: Taxpayer
a resident of Another Pleasanton neighborhood
on Aug 2, 2011 at 9:29 pm

"The pension system for FD and PD is insane and cannot be allowed to continue. They pay nothing in during their careers. They retire at age 50 with as much or more likely even more money than they made when working. They get COLAs for their lifetimes. They get free medical benefits for their entire family...

Are you tired of paying for that? Let your city council and state representatives know."

I think it's difficult for the Mayor to acknowledge this issue because of who has supported her political career. I do believe there are council members that understand your concerns.

We all need to be vocal.


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Posted by Maynard
a resident of Foothill Farms
on Aug 3, 2011 at 12:40 am

Is it just me, or does anyone else think that the Police and Fire are just holding tanks for incompetent minorities who can't hold on to a job in the real world?


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Posted by Concerned
a resident of Another Pleasanton neighborhood
on Aug 3, 2011 at 7:23 am

I understand that unlike pension benefits which are legally guaranteed, medical retirement benefits are not and can be lowered. Can anyone confirm this?


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Posted by Blossom
a resident of Stoneridge Orchards
on Aug 3, 2011 at 8:23 am

I can't guarantee it, but public workers' medical benefits are something I've wanted lowered or prefferably removed for a long time now. No doctors' visits on MY dime!


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