Funding the Unfundable
Is there any way to word it?
I’m thinking of a constitutional amendment, something citizens in initiative states could vote for that would curtail an absolutely insane practice.
I refer to unfunded pension and health care benefits.
I came across this practice most recently in Washington state. An analysis by Amber Gunn of the Evergreen Freedom Foundation shows the state’s public employee health benefits plan is accumulating huge debts.
“Over the next 25 years,” she writes, “the cost of health benefits for public retirees . . . could reach more than $12 billion.”
How? The state doesn’t pay for its workers’ and pensioners’ health care benefits by investing in an insurance policy. Instead, the state simply pays the medical bills as they accumulate.
Now, there are a lot of people who want to turn the whole U.S. health care system into something similar. But it has a drawback. Costs can skyrocket, and you haven’t planned in any way to minimize those costs. Taxpayers just keep paying and paying.
No sane business person would concoct such a scheme. But politicians kinda like this method. They can promise anything, and it won’t appear on any balance sheet until the promises come due.
Someone else’s problem. A future legislator, perhaps.
Citizens in Washington and elsewhere need a carefully-worded rule to prohibit politicians from promising any future benefit without funding that benefit within the year of the promise. Just to prevent utter irresponsibility. And state bankruptcy.
This is Common Sense. I’m Paul Jacob.