Some states have stopped paying for public retirees' health care benefits in response to rising health care costs and squeezed budgets, the Wall Street Journal reports.
By the numbers: There's about a $600 billion gap between what states have promised retirees — mostly in health benefits — and what they have actually saved up, according to government data compiled by Eaton Vance Corp.
The big picture: The decisions are separate from pension benefits. It's easier legally to cut retirees' health care benefits than pensions, which drives some of these decisions.
- North Carolina will no longer pay workers' health benefits once they retire, starting with new workers hired in 2021.
- Kansas has asked retirees to pay their entire premiums, which have jumped to as much as $1,000 a month. And Iowa has capped its flagship university's contribution to retirees' health care.
- When Kansas made these changes beginning in 2017, three-quarters of enrollees dropped out. And the state's retiree health care liability dropped from $6.1 million to $508,000.
My thought bubble: The problem of rising health care costs is even more dire at the federal level, but states — unlike the federal government — must balance their budgets.