Future state retiree health benefits to top $51.8 billion

State Controller John Chiang released a report yesterday that calculates the dollar-amount value of the health and dental benefits now accrued by current state employees and retirees.

His total? $51.8 billion, or the equivalent of 17 years in CalPERS shortfalls. But unlike CalPERs, these health benefits have no regular source of funding. Since there is no cash set aside, and no investment returns allotted to pay for them, a new bill comes fresh every year.

We should also note that Chiang’s total only covers benefits for state employees and retirees. Those associated with local governments bring the total to at least $118 billion, according to this Public Employee Post-Employment Benefits Commission report from last year.

Solutions exist, but — surprise, surprise — none have been implemented. The nonpartisan Legislative Analyst’s Office recommended last year that state retirees pay a greater portion of their healthcare costs out-of-pocket. The legislature could also lower the rate of premium growth, especially with the expected dramatic increase in eligible retirees over the next ten years. See that analysis here (page F-118).

The same report explained that state retiree medical and dental were instated when health care costs were lower. We hope so.

See a summary chart from today’s report here.


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