Monday, August 17, 2009

OPEB and National Health Care

Lately, this blog has commented a lot on the national health care debate. In part, that is because the parent organization of DSEA, the National Education Association is one of the major players promoting true reform. Also, the blog has made several arguments about how the current system undermines our economic bargaining because money that should be used for salaries is siphoned off for health care. Of course, for the DSEA members who do not have contracts covering their insurance contributions, no argument needs to be made as a 50% increase in monthly premiums becomes effective this summer.

With all that said, I discovered another reason why school employees and other state employees should want a national health program, OPEB.

Other Post Employment Benefits, known by the acronym OPEB is becoming a major state budget issue. In simplest terms, OPEB is health care for our retirees. Not only do some in state government not like paying for this benefit, but it is also becoming increasingly difficult to budget for retiree health care.

The Government Accounting Standards Board (starting in FY 2008) makes states reflect the full cost of retiree health care benefits earned by current employees on their financial statements. In other words a way of forcing the issue of health liability for the future.

Although the federal government does not mandate funding this liability, or even a funding strategy, states feel the need to address the obligation and begin putting money aside into OPEB trusts. Moreover, states have started to think about ways to reduce this liability. This usually means making a two tiered pension plan where new hires do not have post retirement health care. It also means schemes for placing current retirees in insurance pools separate from active employees. None of these scenarios are good for state employees.

A national health program eliminates the OPEB problem.

There are only 50 governors in the country. That makes them a pretty exclusive club and a powerful lobbying body. I hope our governor is talking to Senator Carper and Congressman Castle about supporting national health care.

Meanwhile, Senator Kaufman continues to roll along supporting issues for the common person, such as national health care, without arm-twisting.

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