Editorials

editorial

As retiree health costs loom, towns need tougher reforms

Despite taking grief from both public labor unions and municipal managers, Governor Patrick is pushing ahead with efforts to trim the health insurance benefits of public-sector retirees. This is a vital matter. In 2012, a special commission warned of about $45 billion in unfunded retiree health care costs at the state and local levels over the next 30 years.

Patrick has been working both publicly and behind the scenes in recent weeks to revive his bill that would tighten eligibility requirements for retiree health coverage; instead of qualifying at age 55 with 10 years of service, many public employees would need to wait until at least age 60 and have 20 years of service. Patrick might have taken the politically easy way out by applying the reforms only to new hires. But he didn’t. In large part, the reforms would extend to active employees, which is necessary to achieve significant savings.

Predictably, some public unions are opposing the measure. But Patrick appears especially miffed by the fact that the Massachusetts Municipal Association, which represents local officials, did not support his bill. Last month, the governor even made a dramatic, unannounced appearance at the group’s annual meeting to urge support for his effort.

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Municipal managers are less than impressed with the administration’s projected savings of $9 billion to $12 billion over 30 years. In part because some current employees would be grandfathered in, only a tiny fraction of Patrick’s savings would come in the next 10 years. Local governments need relief much sooner. In its current form, Patrick’s bill leaves town managers having to explain why they are cutting police and fire services to taxpayers, few of whom receive retiree health benefits from their private-sector employees.

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In one way, Patrick’s bill is counterproductive. It would freeze the percentage of retiree health insurance premiums — which now averages 70 percent — borne by local taxpayers. That might assuage some public employee unions. But it would strip municipalities of the only real tool they have to control costs. That freeze provision needs to go.

Many Massachusetts residents know that public pension liabilities pose a serious fiscal threat. The Massachusetts Taxpayers Foundation reminds everyone that the unfunded retiree health care liabilities of cities and towns, which now stands at $30 billion, is more than double the unfunded pension liability. Patrick deserves credit for pushing such an important, but politically difficult, bill in his last year in office. But getting this problem under control it will require a more aggressive bill than the governor is now offering.