First step in bailing out the blue states and their unfunded, unsupportable pension promises to public workers

 

See ya, suckers!

See ya, suckers!

ObamaCare will allow them to shift hundreds of billions of retiree health care benefits onto the rest of us (our children, in fact). 

That still leaves trillions of pension dollars that will have to be paid by those same children but like the pension promises themselves, this will provide temporary relief, and afford the current crop of politicians time to finish up their careers and get the hell out of Dodge.

States and localities have enormous liabilities in the form of health benefits they have promised to provide to retired workers. (Finance professionals call these benefits OPEB, or “other post-employment benefits.”) Most public sector retirees get health plans until they turn 65, and then supplemental coverage on top of Medicare after that.

In most cases, state and local governments haven’t prefunded these liabilities at all. As Americans age and health care costs rise, this is becoming a major drain on state and local finances, arguably more important than more-widely-discussed problems with public employee pensions.

But Obamacare will give states and cities a major out. Instead of providing health care to under-65 retirees, they can tell them to go buy health plans in the Obamacare exchanges. In many cases, those retirees will qualify for substantial subsidies to buy such plans. States and localities will often stand to save thousands of dollars per retiree per year, even if they provide a cash stipend to help each employee buy insurance in the exchange.

All told, state and local governments should be able to shift hundreds of billions of dollars in OPEB liabilities to the federal government. That will mean a major saving for those governments. But it will also drive costs upward at the federal level.

9 Comments

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9 responses to “First step in bailing out the blue states and their unfunded, unsupportable pension promises to public workers

  1. Cos Cobber

    Exactly. This is the beginninig of the stealth migration of state liabilities and the only way to keep blue states solvent in 2030.

  2. Fred2

    And when the exhanges collapse the blue states will be off the hook and it’ll be the fault of that other party.

  3. burningmadolf

    This was pretty obvious from the beginning and should have been where opposition was focused all along instead of bullshit strawmen like death panels.

  4. Medicare is already liable for the vast majority of their heath care costs.

    • If I understand the article, what ObamaCare will do is enable the towns and states to push their under-65 retirees, who are not yet on Medicare, off on the rest of the country’s taxpayers. That can be a lengthy period of time, considering how many union contracts provide for retirement at 50 or 55.

    • burningmadolf

      That is just wrong Richard. CT for example=$27 BILLION in healthcare liabilities and 0% funded. Medicare, Medicaid, friggin Medi-chair ain’t filling that gap. It will be pushed to the feds and then we can all fail to pay.

  5. Anonymous

    At least Obama is keeping one of his campaign promises…”I will findamentally change the United States of America”