Here’s some good news for taxpayers: Erie County’s long-term liability for health insurance for retirees has dropped significantly.
Some recent changes will save a relatively small amount of money in the next decade or so, but in later years will add up to millions of dollars a year.
The latest long-term estimate for future health care benefits for retirees was $789.8 million as of Jan. 1, 2012, down a staggering $187.8 million from two years before that, according to a report prepared for the county. However, the short-term outlook is grim. The report estimates the cost of health care for retirees will grow from $20 million in 2012 to $40 million in 2022. After that, actions being taken now will bend that curve down.
The projected savings is a function of both a smaller county workforce, meaning fewer workers who will eventually retire and receive health insurance, and the fact that workers hired over the last few years and going forward will have to pay some or all of their health insurance costs. That represents a change from the past, when the county paid all of retiree health care.
For these newer retirees the change won’t be a good thing – who wouldn’t want fully paid health insurance for life? – but it is critically important for the county’s financial health and it brings public employees more in line with their private-sector counterparts.
The drop in the workforce is the result of a concerted effort by recent administrations to reduce costs while maintaining essential services. In addition, contract language has been negotiated with some unions that will see members paying more, or all, of their health insurance costs when they retire.
That change in union contracts is long overdue. The soaring cost of retiree benefits is a major element strangling municipal budgets.
The county negotiated contracts at the end of the year with CSEA Local 815, which represents corrections officers, and Teamsters Local 264, which represents employees at both jails. Terms for both unions require a percentage of health insurance premiums to be paid by current and new employees. Even more significantly, new hires will no longer receive county-paid health insurance after retirement.
The contract for the largest CSEA union, which is a separate bargaining unit, still provides retirees with free health insurance for the rest of their lives. Most county employees now are in this category. That fact, and the expected heavy retirements from the aging workforce in the next decade, account for the short-term growth in health costs.
Still, the tide has been turning ever so slowly over the course of years. County officials should be commended for their efforts as they face difficult negotiations with the largest union and with other unions as contracts come up.