California's Retiree Health Care Costs Jump Past $70 Billion

The state controller’s office says California is now on the hook for more than $70 billion in health care costs for retired state workers. That’s a 10 percent increase from last year. Gov. Jerry Brown plans to take the issue on in his new budget proposal next month.

The sharp increase in retiree health care costs comes mostly because we’re all living longer. Controller John Chiang says the state must start pre-funding its retiree health care benefits – just as it does with pensions. He compares it to making credit card payments:

“We know that the debt service increases over a period of time – and that you ought to fully pay each bill monthly with your credit card,” Chiang says. “California ought to be paying down our health care costs on an annual basis.”

Chiang says the state should increase its retiree health care contributions significantly over the next five years. Asked if workers and retirees should pay more as well, he says all options should be on the table.

The governor’s Department of Finance says Brown will put forth his own plan to address the state’s $70 billion unfunded liability in his budget proposal early next month.