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POLICY: The Uncertain Future of Public Retiree Health Coverage

Brian Klepper has been warning about this for a while. Public agencies have much better benefits for their employees than their private equivalents. And they don’t account for those future costs. There is a FASB106 moment coming up—it was FASB106 that inspired private corporations to push managed care in the 1990s by forcing them to put their future health care liabilities on their balance sheets. Same thing is about to happen to government agencies, hence the new CHCF focus on The Uncertain Future of Public Retiree Health Coverage.

“These accounting changes will illuminate the significant and growing impact of retiree coverage on many public agency budgets,” said Marian Mulkey, M.P.P., M.P.H., senior program officer at the California HealthCare Foundation. “Difficult decisions about spending priorities will follow.”“By confronting this issue head-on and weighing options, elected officials, administrators, unions, and other decision-makers can begin to identify remedies to this complex problem,” said Dr. Smith.

In other words the brown stuff is about to fly through the air to hit the whirly thing. 

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PeterBarry Carol Recent comment authors
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Peter
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Peter

Barry, I also believe in pulling back the covers to reveal the truth, but where is this, “efficient allocation of resources” going to come from? Most allocations to public services are underfunded now. I do know that the “solution” will be claw back as tax payers will want to continue to rob peter to pay paul. Maybe we can get “guest workers” to replace civil servants, then we don’t need to pay a living wage or provide benefits, and in the end can just send them back to Mexico.

Barry Carol
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Barry Carol

The accounting standard you are referring to, GASB-45, takes effect in 2008. I see this as another significant example of transparency leading to more market discipline in determining public sector compensation and, ultimately, more efficient allocation of resources. It’s about time!