Detroit may be the first, but it certainly won't be the last city or state to shift employees or retiree health care costs onto Obamacare. Cities and states are drowning in debt, but they can't print money like the feds can... so guess who will get stuck with these unfunded promises?
Unfunded retiree health care costs loom larger than ever for localities across the country, and the health law's guarantee of federal subsidies to help people with modest incomes afford coverage has made the new insurance markets tantalizing for local governments. A study issued this year by the Pew Charitable Trusts found 61 of the nation's major cities wrestling with $126 billion in retiree health costs, all but 6 percent of that unfunded.
"The Affordable Care Act does change the possibilities here dramatically," said Neil Bomberg, a program director at the National League of Cities. "It offers a very high-quality, potentially very affordable way to get people into health care without the burden falling back onto the city and town."
But if large numbers of localities follow that course, it could amount to a significant cost shift to the federal government. Authors of the health care law expected at least some shifting of retirees into the new insurance exchanges, said Timothy S. Jost, a law professor at Washington and Lee University who closely follows the law. "But if a lot of them do, especially big state and local programs," he said, "that's going to be a huge cost for the United States government, and it's mandatory spending."
Unlike many of our debts, promises of health care are hard to pay for with inflation. The cost of health services will rise along with inflation.