Friday, April 07, 2006

Retiree Medical Costs

Pensions go bust makes headlines. But no one is talking about ballooning retiree medical costs.

States may find that what it costs them to provide medical care for retired state employees will dwarf how much they pay for their retirement benefits,

Many big companies are slashing both health and pension benefits, especially in struggling industries such as airlines and autos. But it is much more difficult for states to make similar cuts, at least for unionized employees, because that can require changing current laws.

New Jersey expects to pay more than $1 billion to provide health care for both its current and retired employees.

"And the kicker is that $721 million of that is for retired teachers," he said. Local school districts pick up the tab for teachers who are still working. "But we as a state pay the full boat for retirement benefit costs," Vincz said.
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