Ever Increasing Municipal Retiree Health Costs a Big Problem in Places Like Everett

Friday, October 3, 2014

After reading the latest Massachusetts Taxpayers Foundation (MTF) bulletin on the oversized burden retiree health care costs put on municipal budgets, my first reaction was, Steve Wynn can’t build that casino in Everett fast enough.

Everett was cited in the bulletin because it is a good example of a bad situation -- a place where the average citizen barely gets by, and where the cost of providing health coverage to retired municipal employees consumes an ever larger share of local revenue.

An independent non-profit research organization, the MTF used two criteria in selecting Everett and eight other municipalities for analysis.  First, a city or town had to have a population of at least 10,000.  Second, the average annual per capita income in that city or town had to be among the lowest in the state.  Besides Everett, those municipalities are Amherst, Chelsea, Fitchburg, Holyoke, Lawrence, New Bedford, North Adams and Springfield.

“Between fiscal 2009 and fiscal 2013, the total costs for retiree health care coverage in the nine municipalities rose from $71.8 million to $88.8 million, an increase of 24 percent, while property taxes grew at half that rate, a modest 12.1 percent,” the bulletin said. 

The bulletin said that “The jump in retiree health care spending is especially striking when considered in the context of the tiny two percent growth in the total budgets of these nine communities between 2009 and 2013.” 
The bulletin pointed to the irony of local taxpayers funding a benefit for municipal retirees “that most of them do not receive,” i.e., private health coverage in their golden years.
“Few residents have access to any (private) retiree health care benefits themselves,” the bulletin said, “let alone the generous ones provided by municipalities.” 

It went on to cite figures from the Agency for Health Care Quality and Research showing that, in 2013, only 7.3 percent of Massachusetts private sector establishments offered health insurance to retirees over age 65, and only 8.8 percent offered it to retirees prior to age 65.
The MTF has long argued that the system governing health care benefits for retired public employees should be reformed.  It restated that case in its latest bulletin.  The MTF called upon the legislature, for example, to double the years that a municipal (or state) employee must work before qualifying for health benefits in retirement, from 10 to 20, and to eliminate altogether pre-Medicare coverage for retirees.

If I were back living in Everett, I’d be writing letters now to my rep and senator asking them to support every change in the system supported by the MTF.  Otherwise, I’d say, the tens of millions of dollars promised to the city every year by the Wynn Everett casino might end up going mainly to retiree health care.
Of course, retired city workers, once they got wind of my letters, would soon be writing letters to the same legislators saying don't you dare change that system.

To find the MTF bulletin, go to the foundation’s website, www.masstaxpayers.org and click on “Retiree Health Care Costs Are Straining Budgets in the State’s Poorest Cities.”






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