Local leaders worry about retiree health care benefits
ANN ARBOR—Health care benefits for retirees of Michigan’s local governmental units are presenting significant fiscal challenges, and more than half of local officials surveyed indicate they are concerned they won’t be able to fulfill their obligations.
The Michigan Public Policy Survey found officials in 53 percent of local jurisdictions that provide these benefits are somewhat concerned or very concerned that they won’t be able to meet their retiree health care obligations.
The survey, conducted by the University of Michigan’s Ford School of Public Policy, found that 22 percent of local officials said their jurisdictions provide such benefits to retired employees or elected officials. This includes 84 percent of the state’s largest local governments.
“Retiree health care obligations are clearly presenting challenges for local governments in Michigan and around the country,” said Tom Ivacko, administrator of the Ford School’s Center for Local, State and Urban Policy. “It’s good to see this is on the radar for local officials, but solutions will be hard to come by.”
Recent studies have found that Michigan’s 83 counties have a combined accrued liability for retiree health care of at least $4 billion, while the obligations reach $13.5 billion for Michigan’s cities, villages and townships. Nationwide, the liability has been estimated as high as $2 trillion.
Many Michigan jurisdictions have taken actions to deal with these challenges—such as introducing less expensive health care or prescription plan options and increasing cost-sharing by retirees—and 71 percent believe their efforts have been somewhat (50 percent) or very (21 percent) effective at controlling costs.
Surveys were sent in April-June via hard copy and the Internet to elected and appointed officials in Michigan. A total of 1,328 jurisdictions returned valid surveys, a 72-percent response rate. The margin of error was 1.4 percent.