Healing an unhealthy system

Unfunded health benefits for current and future California state workers are expected to cost $64.6 billion over the next 30 years, state Controller John Chiang said last week.
That estimate is based on June 30, 2013 figures that are not adjusted for inflation. That estimate also is $730 million higher than it was just 12 months earlier.
Clearly this -- not unlike the unfunded employee benefit costs facing many California cities, including Stockton -- is a ticking time bomb.


California Controller John Chiang

For the state there is an answer, Chiang believes. He proposes a painful plan that would fully pay the costs within five years. He would add higher payments on top of what the state shells out of its general fund to cover current bills: $220 million in the coming fiscal year growing in steps to $1.37 billion in fiscal 2018-19.
Is this the answer? The proper question is whether we can afford to wait to start seeking a realistic solution.
Today the state has $1.8 billion in the budget to pay for retiree health benefits. That money goes out the door as fast as it comes in. It only pays for medical and dental bills as they come due with nothing -- zero -- set aside for future obligations. You can liken that to making minimum credit card payments while continuing to pull out the plastic for new charges.
Chiang's five-year plan would be enormously painful in the short term but save taxpayers billions -- and in all likelihood save the system for state workers -- in the long run.
Chiang has proposed a solution. It now falls to lawmakers and the governor to start working on the problem.