The Funding Status of Retiree Health Plans in the Public Sector
AbstractWhile no longer common in the private sector, most public sector employers offer retiree health insurance (RHI) as a retirement benefit to their employees. While these plans are thought to be an important tool for employers to attract, retain, motivate, and ultimately retire workers, they represent a large and growing cost. This paper reviews what is currently known about RHI in the public sector, while highlighting many important unanswered research questions. The analysis is informed by detailed data from states on their liabilities associated with RHI, which were produced in accordance with the 2004 Government Accounting Standards Board Rule 45 (GASB 45). We consider the extent of the unfunded liabilities states face and explore what factors may explain the variation in liabilities across states. The importance and sustainability of RHI plans in the public sector ultimately depends on how workers view and value this post-retirement benefit, yet little is known about how RHI directly impacts the public sector labor market. We conclude with a discussion of the future of RHI plans in the public sector.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16450.
Date of creation: Oct 2010
Date of revision:
Publication status: published as Robert L. Clark, Melinda Sandler Morrill. "The Funding Status of Retiree Health Plans in the Public Sector," in Jeffrey R. Brown and Robert L. Clark, organizers, "The Economics of State and Local Pensions" Journal of Pension Economics and Finance, volume 10, issue 2, (Cambridge University Press) (2011)
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Find related papers by JEL classification:
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
- J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
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- Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, vol. 19(4), pages 529-539, July.
- Erin Strumpf, 2010. "Employer-sponsored health insurance for early retirees: impacts on retirement, health, and health care," International Journal of Health Care Finance and Economics, Springer, vol. 10(2), pages 105-147, June.
- Barry T. Hirsch & David A. Macpherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
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