Near Failure by US States to Fund Retiree Healthcare Costs may Produce Budget Crises

US states haven’t financed almost 96 percent of the $627.4 billion they were projected to owe for future retiree benefits in 2010, reports Bloomberg Rankings data on bloomberg.com. The nation is trying to find a way to finance the projected costs of retiree health care. New Jersey owed almost $7,600 per resident for public workers’ post-employment benefits other than pension payments.

The estimated deficit grew from about 95 percent in 2009 as governors coped with lower general-fund revenue and rising demand for services following the longest recession since the Great Depression.

Alaska, Connecticut and New Jersey had the largest unfunded liabilities, ranked in proportion to population, among the 47 states examined.

So how does the US deal with the cost of healthcare, especially that of its older population?

Measures have been enacted last year by New Jersey that increased pension and healthcare contribution rates for government workers and raised the age for retirement with full benefits to 65 from 62. It is hoped that the changes will cut costs by at least $10 billion over 30 years.

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Source-Medindia