Pay for Retiree Health Care by Putting California Government Workers in Obamacare

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

As I’ve stated here before, there is no reason for California governments to continue retiree health care benefits for those who aren’t already retired or vested. It’s costly as heck (and getting costlier), and money hasn’t been set aside to pay for the benefits. And this country has Obamacare and Medicare to cover government retirees.

But retiree health care seems here to stay – in fact, the Brown administration is widely reported to be coming up with a plan to provide more of a funding base for it. That’s essential — even if the state comes to its senses and ends retiree health care, there will be many decades of benefits to pay for those who already have earned them.

But how to provide funding? I’d suggest taking a hard line: no other program or part of the budget should suffer to pay for retiree health care (that could just as easily be provided by existing public programs). So how to pay for it? The most appropriate way would be to put today’s state and local government workers into the insurance markets created by Obamacare.

The money saved – a Stanford study estimated the annual savings to California would be $1.4 billion – would be significant, providing a base of funding for retiree health care.

There’d be other benefits to the shift – including building up the fledgling markets with new customers and giving powerful public employee unions a stake in making the markets work. (Do you think it would be so hard to get Covered California on the phone if SEIU members were its customers?) And it’d be more than fair, since unions are the most important backers of the party that gave us this new health insurance system.

Of course, the fairness of such a policy wouldn’t stop unions from opposing this . And that opposition represents an opportunity for both sides of the political spectrum. The right could point out that even Democratic interest groups don’t want to go on with Obamacare. Republicans in the legislature, if they’re going to use their newfound ability to block Democrats who lost their supermajorities, would be wise to seize on this issue; they should block measures that require two-thirds until they get the elimination of retiree health care going forward.

Less-political people on the left could point out that having public employees getting platinum-coated health benefits means less money for vital public programs and investments. And they could make the most fundamental of progressive arguments: shouldn’t we all be in this together?

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