Retiree healthcare solution: Let Obamacare pay for it!!!
Last week I wrote about a report that called Chicago’s pledge to subsidize the health insurance premiums of retired city workers unsustainable. The program already costs the city $109 million annually and its cost is projected to grow to $540 million in a decade, as the ranks of retirees grows. Now one member of the commission that issued the report has a solution. Let Obamacare pay for it!
By dropping the city’s current health insurance plan and sending retired city workers to the new Illinois Health Insurance Exchange, created in response to the Affordable Care Act, the city could save a whopping $60 million annually, commission member Leemore Dafny writes in a opinion piece.
Retirees would pay lower rates than those now charged by private insurance because Obamacare requires the exchanges “to issue comprehensive plans to all comers, at rates that do not reflect health status and which vary to a limited degree by age,” Dafny observes.
If this sounds like a magical solution, the equivalent of printing money, it is not, of course. Dafny’s solution is merely a form of cost-shifting in which taxes imposed on individuals and businesses across the country will subsidize the below-cost rates charged by the Illinois insurance exchange, whose ranks will bulge by the tens of thousands as Chicago’s municipal retirees crowd into the exchanges.
Don’t expect this ‘solution’ to stop with Chicago. The Pew Center on the States estimates that states have $660 billion in unfunded promises to workers to pay for their health care in retirement, and 61 of our largest cities have another $119 billion in liabilities. Some states are so beset with pension woes they haven’t even begun to address the cost of these health insurance liabilities, which are set to skyrocket.
So instead, expect millions of state and local government worker retirees, especially those from states and cities which have the most generous early-retirement programs and have funded them the least, like Chicago, to wind up on federally subsidized Obamacare insurance exchanges as states and cities seek a way out of their obligations. It will amount to essentially a federal bailout of these obligations.