The Next Retirement Time Bomb
NY Times, December 11th, 2005
SINCE 1983, the city of Duluth, Minn., has been promising free
lifetime health care to all of its retired workers, their spouses and
their children up to age 26. No one really knew how much it would cost.
Three years ago, the city decided to find out.
It took an actuary about
three months to identify all the past and current city workers who
qualified for the benefits. She tallied their data by age, sex,
previous insurance claims and other factors. Then she estimated how
much it would cost to provide free lifetime care to such a group.
The total came to about $178 million, or more than double the city's operating budget. And the bill was growing.
"Then
we knew we were looking down the barrel of a pretty high-caliber
weapon," said Gary Meier, Duluth's human resources manager, who
attended the meeting where the actuary presented her findings.
Mayor
Herb Bergson was more direct. "We can't pay for it," he said in a
recent interview. "The city isn't going to function because it's just
going to be in the health care business."
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