Thursday, May 10, 2012

Public worker benefits are killing gov't services

From the NY Post:

Across New York, the cost of health benefits for retired government employees is growing so rapidly that it threatens to crowd out funding for essential government services. Rather than lay off police or close libraries, public officials may want to use their discretion to alter retiree health insurance — but some state legislators are trying to take away that discretion.

These lawmakers are introducing bills that would prevent government officials from reducing current benefit levels — in effect, forcing them to sacrifice core services instead.

In fiscal year 2012, New York City will pay $1.6 billion for health insurance for retired government employees — more than is budgeted for transportation and park operations combined. The state paid $1.3 billion for retiree health care in fiscal year 2011-12, as much as it gave to support the City University.

Retiree health-insurance costs are up 44 percent in the city budget and by a third in the state budget from just five years ago — and that’s still not enough to fully fund the future benefits that have been promised.

These unfunded liabilities are staggering — and growing. The most recent estimates are $84 billion for the city and $56 billion for the state. The Empire Center estimated the statewide unfunded liability at more than $200 billion in 2010.

New York City has the greatest liability because its health benefits are the most generous. It takes only 10 years of employment to vest for lifetime retiree health benefits, which begin upon retirement at any age and require no retiree premium contributions. The city even reimburses retirees over age 65 for the full cost of their Medicare Part B premiums.

Current law lets public employers make changes to health benefits. The only exception is for teachers in schools outside New York City; a 2009 law protects their retiree health benefits from reduction.

Now other unions are seeking the same protection. Six bills have been introduced in the Legislature to prevent state and local governments from reducing retiree health benefits unless public-employee unions agree to an equivalent reduction for their active members via collective bargaining — a highly unlikely event.

Their proponents claim these bills would have no fiscal impact because they provide no new benefits. But they would make it virtually impossible to save money at a time when the flexibility to grapple with pressing fiscal challenges is urgently needed.

As the costs of retiree health benefits grow, local governments and school districts across New York will have to choose between reasonable reductions in benefits or cuts in crucial services: police and fire, schools, roads and bridges, parks and so on.

Government retirees should always be treated fairly and with due respect for their public service, but it’s a mistake to tie the hands of state and local elected officials further. With health-care costs skyrocketing — and the unfunded liabilities already at staggering levels — they shouldn’t be put in a position where they have to lay off current workers and reduce services because they have no latitude in addressing retiree health-insurance costs.

23 comments:

Anonymous said...

"In fiscal year 2012, New York City will pay $1.6 billion for health insurance for retired government employees"

That is the crux of the problem. If we had instituted a Public Health Service as per Truman's advice, we would have an infrastructure that keeps costs of medical education and service provision dowm.

You aren't going to get anywhere trying to curtail these core benefits to Civil Service or other public service unions.

Any pol that tries real change there will find themselves with strikes and job actions along with lawsuits such as to make the late 60's look like the good old days of labor relations.

The basic problem is the monster that is our market based health care system.

Anonymous said...

Let's see, I work for say 35 years and some number cruncher takes away my heath benefits when I need them most. Then they give their well connected friends tax credits to build luxury apartments for the rich.
That sounds right ?

RC said...

Regardless of how the Post and News Corp. would love to see public (and likely all) unions busted, this editorial points out a undeniable fact: health care costs and corresponding insurance premiums are rising at a rate unsustainable by our rate of income growth.

Soon, no one in the middle class will be able to afford the standard of health care we have become accustomed to.

Queens Crapper said...

And of course, because this op ed was published in the NY Post, it means the Post and News Corp would like to see public unions busted. Never mind that the author is from Citizens Budget Commission, which is "a nonpartisan, nonprofit civic organization whose mission is to achieve constructive change in the finances and services of New York City and New York State government."

Regardless of how you feel about Rupert Murdoch, the fact is that taxpayers can't afford to be giving super generous benefits to public employees anymore.

Anonymous said...

I have no doubt this is true-- and I say this as a Public Worker, myself. Do the math. Tax revenue down, people living well into their 80s or 90s now, drawing on pension plans established in the 1960s and 70s meant to support people for perhaps 15 years after retiremnt until they died. The entire tax base will be needed to support these pensions. There will be nothing left for any other purpose. Go ahead and "tax the rich". That won't be enough to fill a cavity and solve this unfixable system.

Anonymous said...

I am a non-union public employee and I would gladly contribute more to my health insurance now and in retirement; but the unions won't let me. How stupid is that logic?

Anonymous said...

let's look at the reason health insurance costs are rising? You have illegals and welfare recipients on one side using the medical services for free WITHOUT contributing to the pot (that's all insurance is). now you have employers (public and private) with higher premiums with they have to pass it on to their employees in some way. The post, catering to the simple minded ny'ers, simply throws out statements that these public workers are directly responsible for cuts in other departments and most of the readers of the post arent smart enough to think on their own and believe every thing they read. This is coming from a republican.

Anonymous said...

Before Clinton's Universal Health Care proposal, Republicans and Corporate interests were asking for a public insurance option, saying US was at a distinct competitive disadvantage. Now we hear that health care costs continue to stifle private and public enterprise. If we can't get it together to keep everyone covered, stifling the insurance industry, then perhaps a state euthanasia program is in order. . . Let's get real about the critical (hah!) need for public health care, already!

Big Hairy Balls said...

I am a NYC public school math teacher retiree. I am also a VN (USAF) vet. A deal is a deal, when I went into teaching in the early 70's I was promised A,B & C at retirement. I met their conditions. You wouldn't believe the anger & nasty comments I endure because I saved, lived wisely & planned for my future life in my 20's. If NYC & other jurisdictions want to change the rules for incoming personnel then they should be transparent about their intentions vis-a-vis benefits. I chose city gov't just for that reason. I earned my station in life & jealousy will not accomplish any solution. If there is a financial problem let's start with pork barrel spending not some 70 yo's pension. Long live QC! Long live Israel! Death to the Syrians, Iranians & Palestinians!

RC said...

Agreed: private sector-employers have found and governments are starting to realize that they can no longer throw money into an ever-expanding health care coverage hole. As I stated, it is an unsustainable system. Even US armed services retirees will likely find their coverage reduced soon (although they do pay ~$400/year for full family coverage after only 20 years of service.) NY public sector unions are loathe to pay even that much... the slippery slope argument.

Agreed: Cutting health care benefits may help solve the city's fiscal situation. So might a lot of other cuts; that's politics -- authoritative allocation of values and all. But the real problem will remain the unrestrained growth of health care costs. In the long term, we as individuals will end having to pay more into the health care system until eventually we will find it unaffordable.

Anonymous said...

Yeah because paying for thousands of people to live in the projects and sleep all day, paying corrupt contractors to rip the city off millions of dollars for each job they do, and giving healthcare and free education to all the illegals isnt breaking the bank.

Anonymous said...

Let's see, I work for say 35 years...
-----------------------------

Point (1): You worked for 35 years. Perhaps you should have been smart enough to plan and save for your retirement.

Point (2): Working for 35 years and being taken care of fore the rest of your life was fine when the average age at death was 60-ish. Keeping the same working years but then living into your 80s (which is now common), is simply not sustainable.

That leaves two choices: (A) reduce their coverage but keep the number of years they have to "put-in", or (B) keep their coverage but stay in the job longer.

Now, the problem with (B) is the longer someones ass is in a seat, the less turn over there is to new employees, and that is bad for the job market. So really, on the grand scale, only (A) is the viable option.


Union workers had it better than ther should of for a good 50 year run, but that was only as a result of the US being the only real international superpower. We, as a nation, had more than our fair share. The nature of the international market is now such that, as a nation, living at that level is simply no longer possible. Its nobody's "fault" and its not a "failure to keep up" we just had a nice bonus for a while there but now its over.

Anonymous said...

I think you are missing the point about "unsustainable" -- the annual amount of money paid out for pensions and other benefits to former public employees which are locked-in by law will exceed not only the total amount of tax that can be collected in a year but also any amount that can possibly be borrowed to cover the difference.

Anonymous said...

But free public housing,food stamps ,etc,etc,aren't......................

Queens Crapper said...

I like how the public employees are comparing themselves to welfare recipients.

Glendaler said...

The real problem is the lack of universal health care. We will all be bankrupted by healthcare costs until the providers, hospitals, and drug companies are reigned in. To pretend that a middle class worker can save their way to retiree health care is a joke.

American workers--public and private, union and nonunion, are being told they are on their own. With a decent health plan in excess of $1,000 a month, I guess only 1%'ers are allowed health care.

Anonymous said...

NYC is a welfare, sanctuary city, that no longer has the private sector paying enough taxes because they do not have any income . the 35 % U.S. corporate tax is the highest in the world (Canada has a 15% corp.tax and they are in fine fiscal shape).

Capitalism requires profits to sustain the over bloated public servant -union dictatorship in nyc. with no profits, the corporations do not retool,re-invest and hire employees.

over taxing and over regulating the job producers causes fear of the future and flight from the State and Nation.

An Obama tax and spend policy has failed after three and one -half years(9.5-10.5 % unemployment), in the metropolitan area.

Jimmy Carter ,dem. gave us 19% interest rates,10% unemployment and 14% inflation from 1976-80. and tripled the heating oil and gasoline prices.
He lost the presidency 49 states -1.....remember in november...

maybe a Cong .Paul Ryan,G.O.P. anaylst/budget type is needed in NYC.
Koch was bailed out by Ronald Reagan , when he spent nyc into near bankruptcy. Remember "CITY FOR SALE",Wayne Barrett ????

Anonymous said...

Repeal all the mandatory emergency treatment laws and let 'em all die on the ambulance aprons if they have no insurance. That'll take care of the rising cost of health care and this issue will be moot.

Anonymous said...

"I contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle." Winston Churchill

Anonymous said...

"maybe a Cong .Paul Ryan,G.O.P. anaylst/budget type is needed in NYC.
Koch was bailed out by Ronald Reagan"

HUH?

NYC's fiscal crisis came to a head in early 1975. After the Financial Control Board was established and the Municipal unions agreed to buy billions in Municipal Bonds in addition to massive layoffs, the Ford administration agreed to loan guarantees.

I know Reagan is a saint to types like you, but he had nothing to do with this.

Anonymous said...

The Citizens Budget Commission is composed of all of Mayor Mike's anti-labor millionaire friends.

Anonymous said...

OK...
It's time to slice through that perennial horse crap.

If NYC only clamped down and collected all the fines, taxes, etc.
owed...there would be plenty of money to take care of health care for its employees without squeezing it's bank account.

Between the crooked developers
and crooked pols that are costing us millions, we're losing our shirts.

Anonymous said...

The need to fund boomer pension and health insurance caused the financial crisis and subsequent stagnation because we have fewer people paying into the system and a lot more pulling money out.