A main cause [for state fiscal woes] in addition to Medicaid, is the cost of health care for state and local government retirees. These largely unfunded obligations are similar to the pressures on the federal government to fulfill its unrealistic Medicare promises.
But there is a critical difference when it comes to how state and local governments can approach these obligations compared to the federal government. State and local governments can’t print money and typically have “balanced budget” requirements. More often than not, retiree health benefits are not guaranteed under state constitutions, are not insured, and are not protected by federal law, which means the systems in place can be changed.
States that offer extremely generous health benefits for government retirees, and which have little to no pre-funding for those benefits, could choose to move their retirees into the Affordable Care Act’s new exchanges. State and local governments would likely continue to contribute by paying some premium support to individual retirees for healthcare, but the federal government and/or participants in the exchanges would pick up much of the tab. For these states, the exchanges offer a chance to shore up their finances and relieve state taxpayers of some of the looming burden of financing all those retirees. It could be a huge opportunity for states and localities in desperate need of fixing their long-term finances, and one that they should seriously consider in the coming months.
Translation: made too many over-generous promises to retired state employees? Hand them over to the federal government! Let it worry about it; more accurately, let the taxpayers in all those states that managed to stay fiscally responsible worry about it. Most of those people are Persons Of Interest to the current administration, anyway…
PS: No, I do not think that it is wise to assume good faith on the part of the Democratic party’s leadership cadre at this point in time.