As Retiree Healthcare Bills Mount, Some States Have a Solution: Stop Paying

U.S. states are dramatically cutting health benefits for current and future retirees to deal with mounting liabilities and budgetary austerity, reports the Wall Street Journal . The National Association of State Retirement Administrators says states have been reducing benefits, hiking premiums and fees, and narrowing eligibility requirements. According to Eaton Vance, the gap for post-employment benefits, mainly comprised of retiree healthcare, comes to about $600 billion. Meanwhile, the Pew Charitable Trusts calculates that states must pay $1.4 trillion for promised pension benefits. Compounding the issue are U.S. Governmental Accounting Standards Board regulations that forced many states to quantify retiree healthcare obligations. Last year, the board mandated that governments report these liabilities prominently in their yearly financial statements. The Kansas Health Care Commission elected to charge retirees the full cost of coverage starting in 2017. Despite 75 percent of enrollees dropping out as a consequence, Kansas' retiree healthcare liability slipped from $6.1 million to $508,000. In 2011, North Carolina government officials raised the premiums for a key retiree plan. Six years later, they rescinded the benefit completely for new employees starting in 2021.