PA Budget Secretary Says Future Retiree Health Care Costs Estimated at $8...( Masch said. Retiree health care cos...),Health

Retiree health care costs are a growing concern nationally. Other states and many private companies have made drastic adjustments in their retiree health care plans in response to these escalating costs. In Illinois, retirees with less than 20 years of service who are enrolled in the largest plan saw the cost of their health insurance premiums rise more than 60 percent between 2005 and 2007. Ohio created three tiers of retirement coverage, phasing in increased retiree contributions and reducing coverage for retirees with fewer years of service. In West Virginia, retirees now contribute approximately 30 percent of the cost of premiums.

In the private-sector labor market, many employers dropped retiree medical coverage altogether after private-sector accounting rules required firms to calculate future retiree health care costs. According to a Kaiser/Hewitt survey of firms with more than 1,000 workers, 66 percent offered retiree health benefits in 1988. By 2006, that number had dropped to 35 percent.

"The commonwealth will continue to provide promised health care coverage to retirees," Masch said. "The steps we have taken, and will continue to take, to lower future retiree health care costs will ensure that we will be able to keep that promise."

The Rendell administration is committed to creating a first-rate public education system, protecting our most vulnerable citizens and continuing economic investment to support our communities and businesses. To find out more about Governor Rendell's initiatives and to sign up for his weekly newsletter, visit: http://www.governor.state.pa.us.

EDITOR'S NOTE: A copy of the Hay Group report on the commonwealth's post-retirement medical plan costs is available on the budget office Web site: http://www.budget.state.pa.us.

CONTACT:

Susan Hooper
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