From the NY Post:
Amid its budget crisis, the city is on track to lay off teachers, close fire companies, cut social services and impose other sacrifices. Yet such reductions could be avoided if the city reformed its unusually costly commitments for retiree health-insurance and brought them in line with those of other public-sector employers.
Retired city employees can remain on the city's health insurance without paying any part of the basic premium; when they enroll in Medicare, the city reimburses the cost of their Part B premiums. By contrast, health insurance for retirees is rarely offered in the private sector. And in most states, retired public employees must pay a substantial share of the premium.
Providing this benefit for New York City retirees is a big and growing burden on local taxpayers. Retiree health insurance cost $1.5 billion in the current year and is projected to be $2.2 billion by 2015 -- a growth of 50 percent in just four years.
Some City Council members have suggested tapping into the city's Retiree Health Insurance Trust fund to avert the cuts, but that's the wrong end of the right solution. Tapping into the trust would simply take away money that is already set aside to help address existing retiree health-insurance obligations. What's needed is to change those obligations, which have already created a $70 billion unfunded liability.
That's something that the city can do in collaboration with municipal labor unions -- because, unlike public pensions, which are protected by the state Constitution, retiree health-insurance benefits are not guaranteed.