This article discusses one of the dirty little secrets of health plans. They have future liabilities.
“[California] already owes another $48.2 billion in unpaid costs for retiree health and dental benefits.”
In the public sector, prime example California, these future liabilities tend not to be funded.
Suggestion from InsureBlog: if in this world of increasing pandemonium, you yearn for a brief respite of total silence - ask your town manager or mayor how much is the unfunded liability in your town employees' health plan.
Years ago, FASB decreed that all private companies disclose this unfunded health plan future liability and, in fact, reflect it as a cost on their financial statements. Not so for public entities like cities, counties, and states.
You don't think California is the only government entity with unfunded future liabilities, do you?
The unfunded future liability in Medicare is something like $60 trillion – give or take a trillion.
Just who do you think is going to pay these bills? Bernie Madoff? The tooth fairy? Your children and their children and their children?
Oh, and I can’t resist noting this additional gem:
“$11 billion in new borrowing”
See, that’s how states get out of debt these days. Ain’t it swell?
‘sfunny. It never occurred to me to borrow money to avoid indebtedness. Oh well.
All these things explain why I’m not qualified to be governor of California.