Earlier this month as part of the Lame Duck session, the State House introduced a package of bills that would have made changes to Other Post Employment Benefits (OPEB). This proved to be too big of an issue to tackle in such a short timeframe. Since the beginning of the League’s municipal finance initiative and the launch of SaveMICity.org, we identified OPEB reform as necessary consideration. Our goal for any proposed reforms was to ensure that we had 1) a good benefit for retirees, 2) sustainable costs, and 3) a benefit that would allow cities to attract and retain employees. The legislature’s proposal wasn’t perfect, but it did seem to address those points.
Ideally, this is a conversation that would have occurred over several months, bringing together all sides that have a real interest in solving a real problem at the table to craft a solution. Unfortunately that doesn’t happen in Lame Duck, but that does not change the need for meaningful OPEB reforms. Cities, Villages, Townships and Counties face an unfunded obligation of over $11 billion, and it is affecting the ability of many communities to provide services. Our current model is unsustainable.
The cost of providing OPEB benefits has skyrocketed, and the benefits that retirees receive are not necessarily what was promised. Medical advances, while amazing, have driven costs up exponentially. Those “benefits” were not available to someone that retired long ago so they could not have been “promised”, but they are expected as part of modern healthcare. My point is not to deprive someone of modern medicine or technology, but the knife needs to cut both ways. We need modern healthcare design and cost sharing if we are going to be expected to provide modern healthcare benefits.
As is typically the case in a Lame Duck environment, there is not time for meaningful discussion. So emotion runs hot, and politics trump policy. The League did offer conceptual support for the proposal, but asked that we allow time for meaningful debate next session. That is ultimately what happened, but we need to come back together and check emotion at the door to work towards a meaningful solution. This is a tough issue, but we have seen what happens when it is taken to an extreme, the entire benefit is essentially lost. If we can have an honest discussion, we can craft a solution that meets our three goals, and in this case two out of three is bad. Ignoring the reality of this issue could prove catastrophic for everyone.