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Retirees Could Lose Their 'Guaranteed' Health-Care Benefits

Unlike pensions, retiree health-care benefits are not legally guaranteed
ANNIE GET YOUR GUN, Betty Hutton, 1950
Source: Everett Collection

California's struggling to pay for health care for retired state employees, with an estimated $72 billion in medical costs coming in the next 30 years. Governor Jerry Brown's solution: Make workers start contributing money to pay for the health care they'll need after retiring.

Three years ago Brown pushed through a pension system reform to increase the amount public workers must contribute to their pensions, but that effort left health costs for retirees untouched. And while pensions are certainly in trouble, retiree health care is potentially a much bigger deal. Health-care inflation rises faster than pension inflation, and unlike with pensions, employers are not required to prefund health benefits. (The U.S. Postal Service is a notable exception, and don't think they don't complain about it.)