States View Limits On Retiree Health Benefits

Ruzanna Harutyunyan's picture

A New Center for State and Local Government Excellence report looks at how states are balancing retiree health care plans and their need to contain costs.

Retiree Health Care in the American States examines how state administrators perceive the importance of retiree health care benefits to central human resources (HR) goals; how the states structure retiree health care programs; and which cost sharing and cost shedding measures have been adopted and/or are being considered.

The report is one of several surveys and reports the Center has released this year on retiree health care, pensions, and related issues.

All 50 states report they are making incremental changes, focusing primarily on disease prevention, cost containment, and cost sharing strategies. Key findings include:


* State administrators see retiree health care benefits as central to their recruitment, retention, and retirement timing goals.

* Most states intend to keep financing retiree health care on a pay-as-you-go basis.

* On the cost side:

o 17 states expect to introduce a plan to limit the subsidy for future retirees; three states say it is likely they will terminate subsidies for current retirees.

o A large majority of states have introduced disease management programs, have precertification procedures in place for inpatient hospitalizations, and conduct claims payer audits.

o Sixteen states say they are likely to increase the years of service required for vesting in retiree health care.