Health Insurance Public Policy

Every Boston resident owes $3,000 for…

underfunded liabilities for city worker health care costs.  Brookings reports:

Like most American cities, Boston has promised to pay most of the health care premiums for its employees after they retire — which can be as early as age 45 or 50. Boston also subsidizes the Medicare premiums of its retired employees after age 65.

As a result, Boston reported an unfunded liability for retiree health care in 2013 of over $2 billion (that is a B!). This equated to a liability of over $3,000 per city resident — the fifth highest per capita of large American cities. And these figures did NOT include Boston’s share of another almost $2 billion in unfunded health care liabilities for retired employees from the MBTA.

The ways to decrease the deficit are not pleasant. Raise taxes on all Boston residents. Reduce eligibility for lifetime insurance based on minimum years of service (e.g., increase from 10 years to 20 or 30 years) or age (e.g., remove retirees eligible for Medicare. Decrease insurance generosity among those who do get insurance (e.g., more cost sharing).

Underfunded pension and health care liabilities are a serious problem for many U.S. cities that are likely to only get worse over the coming years.

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