"Guaranteed Collisions"

George Will - Guaranteed Collisions: "The public sector's problems with retirees are about to become more visible. The GASB, which writes accounting rules for state and local governments, is going to require them to reveal the cash value of their retirees' health care entitlements. Janice Revell, writing in the May 2 issue of Fortune, notes that when such rules were applied to corporations, in 1990, revealing huge health care liabilities, Wall Street blanched. So, between 1993 and 2003, the percentage of companies offering medical coverage to retirees plummeted from 40 percent to 21 percent...

The public sector is facing similar pressures. All but two states, and a majority of municipalities, have increasingly crushing legacy costs because they provide health care to their retired workers. Buffalo, Revell writes, pays $26 million a year -- equal to a fifth of property tax revenue -- for such benefits. After just five years on the job, any North Carolina state employee is eligible for free retiree health insurance for life, and the GASB's new accounting rules will reportedly add a $13 billion liability to the state's books -- about 40 times the state's annual retiree health care costs."