Retiree health-care costs are a significant liability to future taxpayers, especially as the government-employee population continues to age and retire with high expectations for medical treatment. Many states – 19 in FY2009 – have zero funds set aside to pay for these benefits. Another seven have only funded 25 percent of their liability, according to “The Widening Gap: The Great Recession’s Impact on State Pension and Retiree Health Care Costs,” a report by the Pew Center on the States. Only two states, Arizona and Oregon, have over 50 percent of their health-care liabilities funded.
Iowa is one of the states, according to the Pew data, which has no funds set aside to pay current or future retiree health-care benefits. Instead, state government has been paying these expenses from current tax collections. As of FY2009, the amount anticipated for health-care expenses of current and future government retirees in Iowa was just over $538 million, or over half a billion dollars, according to the Pew Center report.
Most Iowa state government workers do not pay a monthly health-care insurance premium. We are one of only six states that pay 100 percent of health-care insurance costs for employees and their families.
According to the 12th annual Iowa “Employer Benefits Study,” done by David P. Lind and Associates, the average premium paid by private-sector workers in Iowa for their family health-care plans is $346.66 per month, up from only $180 a decade ago.
The FY2013 budget proposed by the Iowa House Republicans calls for all state workers, including Legislators and other elected officials, to pay $200 a month, or $100 every two weeks, toward the cost of their health insurance. This will still be less than the almost $350 per month the average Iowa family working in the private sector pays – and less than most state government employees in other states pay.
The Republicans in the Iowa House of Representatives are on the right path. At the very least, they should adopt this plan for themselves and other elected officials – and set a good example for the rest. Then they should address the unfunded liability of the retiree health care. If these two things are done, the state will continue to move toward sound fiscal health and treat all taxpayers fairly.