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Bill Imposes Requirements For Local Governments Promising Post-Retirement Health Coverage

Republican Author Says Some Municipalities Have Been Shifting Retirees Onto Health Exchanges

Courtesy of Wisconsin State Legislature

A Republican bill that received a hearing Tuesday would require local governments to pre-fund health coverage for retired workers, a proposal that’s come under criticism from counties and municipalities.

It’s the third time Rep. Jeremy Thiesfeldt has tried to advance the bill through the Legislature, which he said “may lead one to question why I keep introducing it.” He said that the reason he’s once again pushing for the measure is President Barack Obama’s health care law.

Thiesfeldt pointed to Detroit’s and Chicago’s city governments, which both recently phased out benefits for certain retirees, sending them to health exchanges instead. He said the governments were using the health care law to offload the cost of retirement health benefits.

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Local governments generally oppose the bill.

“Counties aren’t going out of business,” said Kyle Christianson, director of government affairs for the Wisconsin Counties Association. “They’re going to make good on these benefits. If they promise them, the benefit is going to get paid.”

Municipalities say they don’t want to pay for another component of the bill — an actuarial study conducted every four years to make sure that governments are fully funding retirement benefits.

Local governments opposed to the bill are also predicting the measure could incentivize counties, schools and cities to stop offering post-retirement health benefits altogether, making it tougher to attract or retain workers. Additionally, critics say changing how these benefits are funded could create a costly transition: Local governments might not be able to afford the added expense of changing systems because of state-imposed levy limits designed to control taxes, they argue.

Opponents say the current system of “pay-as-you-go” works well. They say the funding mechanisms provide local control and flexibility.

Thiesfeldt stressed his bill does not pertain to pensions, just post-retirement health care benefits.