New York state and its localities will owe almost $250 billion in payments for retired workers’ healthcare over the next several decades, an “outsized chunk” of the $1 trillion to $1.5 trillion owed by all states and their municipalities, according to a report.
The estimates by the Empire Center for New York Policy, a think tank, were calculated as of 2010. Many states use a 30-year time frame.
New York has a massive liability because of its generous plans and large public sector, according to the report, which was issued on Wednesday.
The price tag for New York City alone was $84 billion in 2011. That exceeds the latest estimate of the liability for the state of California, which in 2010 was estimated at $78 billion, the report said.
The estimate for New York state is slightly lower than California, at $73 billion.
Many states, counties, cities and towns around the nation are struggling to pay the pension and health benefits they have promised their workforce. This issue has tipped a handful of municipalities over into bankruptcy, and sparked a national debate over whether public unions should be restrained and these kinds of benefits curtailed.
The Empire Center’s report said only 28 percent of firms in the United States with more than 200 workers and 3 percent of smaller enterprises offered their retirees health care coverage.
Unlike pension benefits, the report said that retiree health care is not guaranteed by the New York State Constitution. “Elected officials can still change course on retiree health care by restructuring benefits for both current retirees and active employees,” it said.
The remedies the report suggested included having employees pay more for health insurance and creating a medical trust to cover health care for all new hires and for workers with less than 10 years of service. The trusts would be run by unions, and funded by their members’ contributions.
Unless the benefits are cut back, some of New York’s counties face exceptionally large burdens, including Nassau County, at $4.6 billion, Suffolk County at $4.4 billion, and Westchester County at $2.4 billion.
The price tag for Harrison, located in Westchester County just north of New York City, works out to $20,000 per household, the report said. That amount “far exceeds the norm for all cities, towns or villages in New York state,” it said.
The New York Metropolitan Transportation Authority, which runs New York City’s buses, subways, commuter rail roads and some major bridges and tunnels, will spend $17.8 billion on retiree health care, the report said.