California State Controller wants action on unfunded health care liabilities: State Controller John Chiang released a report this month showing the unfunded liability of providing health and dental benefits for state retirees under the current funding policy is $71.8 billion. The amount represents the present-day cost to provide benefits earned as of June 30, 2014, which is expected to be paid over the lifetime of current and future retirees. The total unfunded obligation grew $7.2 billion from the $64.6 billion obligation identified as of June 30, 2013. Healthcare claims did not grow as rapidly as expected, and design changes in health systems also helped to lower costs, but those positive events were outweighed by new mortality assumptions that alone added $7.1 billion to the liability. Specifically, men are assumed to live approximately 2 years longer than previously expected. For women, the new mortality assumptions increase life expectancy by up to 1.8 years. The price tag associated with providing healthcare to retired state workers has quietly grown to rival or even eclipse the funding gap associated with public pensions, said Chiang. While important steps have recently been taken to properly fund the States pension obligations, we remain dangerously complacent about a liability that has grown by a stunning $24 billion in just the past eight years. If we continue to do nothing, we will be sowing the seeds of a future crisis. Todays annual report is the eighth time Chiang has sounded the alarm on unfunded retiree healthcare costs. His first report, in 2007, identified the long-term liability at $47.8 billion. Todays unfunded liability is 33 percent higher...
Posted on: Sun, 28 Dec 2014 19:31:44 +0000
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