Post-retirement Health Care Ponzi Schemes
States haven’t financed almost 96 percent of the $627.4 billion they were projected to owe for future retiree benefits in 2010, according to Bloomberg Rankings data…
Most states cover such expenses on a pay-as-you-go basis, yet per capita U.S. health-care spending rising an average 5.8 percent annually for the 10 years through 2009 has made covering required payments increasingly difficult. Stockton, confronting a $417 million unfunded liability for retiree medical benefits, took a step toward Chapter 9 bankruptcy Feb. 28 when the City Council voted to enter a 60-day mediation with creditors.
Entire article from Darrell Preston in Bloomberg.
Cities going bankrupt from entitlements and other spending – that could, unfortunately be the big story within a few years time.
This is scary. First states promise unionized state and local workers lavish retiree benefits that are worth more than the cash wages paid during the short tenure. Then states don’t bother to set aside funds for retiree benefits.
As an NCPA study pointed out, local and state governments aren’t required to report projected retireee health expenses as unfunded obligations and do not put funds aside for that purpose. However, health care expenses for former government employees are rising rapidly.
I’m not surprised.
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