Note to Health Care Reform Activists: Public Employee Health Benefits to Evaporate

According to two recent articles, one in the New York Times and one in the Wall Street Journal, the federal Governmental Accounting Standards Board has begun to require municipalities — states, counties, cities — to account for how much it will cost them to provide all the health care promised to present and retired public employees. This process, to be completed over the next 3 years, has already started in states like Alaska, Delaware, and Maryland and cities like Duluth, Minnesota and Arlington, Texas.

In response, public employers have begun slashing the benefits offered to new hires.  Retirees’ and current employees’ health benefits will be next.  A union struggle will be enjoined, as public employee unions face an ever more defensive struggle to hold on to health benefits.

As of 2006, new hires in Arlington, Texas will have no retirement health benefits.  Alaska, facing a health care cost deficit of $5.7 billion, pushed new employees into high deductible/ HSA (Health Savings Account) schemes (after some heavy lobbying from the White House).  Thankfully, the state constitution protected the benefits of current state workers.  In Michigan, legislation is being prepared that will shift health care costs onto the retirees, period.

It might be tempting to imagine that this phantom emerged because of neo-conservative sorcery, as in Grover Norquist’s desire to shrink the government to a size where he might “drag it into the bathroom and drown it in the bathtub,” or George Bush’s call for an each-against-all “ownership society.”  But the fact is that health care costs for all employers, public as well as private, have grown increasingly impossible as health insurance premiums and drug costs continue to escalate.

Unintentionally echoing Uwe Reinhardt‘s quip that the big three auto makers are “basically social insurance systems” that sell cars, Mayor Herb Bergson says of Duluth:  “The city isn’t going to function because it’s just going to be in the health care business.”

The wholesale effort on the part of employers — public as well as private — to shift costs onto individuals is under full steam because the existing non-system leaves employers no other choice.  Whether employed by a large corporation or a large state, a small city or a small shopkeeper, no employee or retiree will be spared.  Behind this wave will be an eddy in which the ranks of the uninsured — and the bankrupt! — drown, for individually we will simply not be able to meet the costs of our insurance, let alone our sick care.

Health care reform activists should heed these articles.  They say something important about the tempo of change: the health care meltdown is accelerating rapidly.  This disintegration will play out not in the coming years but in the coming months.

Amid this crisis our powerful idea will begin to flourish into social movement: health care should be equally available to all.  National health insurance — covering prescription drugs and all necessary medical and dental care, including mental health, hospital stays, and long-term care — is the only workable solution.



Freudenheim, Milt, and Mary Williams Walsh. “The Next Retirement Time Bomb.” New York Times 11 December 2005.

Hakim, Danny. “Carmakers Face Huge Retiree Health Care Costs.” New York Times 15 September 2005.

Solomon, Deborah. “State, Local Officials Face Looming Health-Care Tab.” Wall Street Journal 23 November 2005.

Physicians for a National Health Program Andrew D. Coates, MD, is a member of Physicians for a National Health Program.