This money now has to be paid off “over the next 10, 20, 30 years. And unfortunately, that’s going to mean either higher taxes, less services or a change to benefit plans,” said Eric Scorsone, PhD, associate professor and founding director of the East Lansing-based Michigan State University Extension Center for State and Local Government Policy. Dr. Scorsone published his analysis on the fiscal challenges of local Michigan governments in his recent report, “Legacy Costs Facing Michigan Municipalities.”
The most likely change to benefit plans would come in the form of cuts, Dr. Scorsone hypothesized, according to the report.
Some cities have already made cost-cutting moves for retirees’ healthcare, such as when Detroit filed for Chapter 9 bankruptcy protection in 2013. In the same year, emergency managers were appointed in Pontiac, Benton Harbor and Flint. Emergency managers ran parts of city governments as part of the Local Financial Stability and Choice Act, designed to safeguard and assure the financial accountability of local units of government and school districts while the cities were ailing financially.
Such efforts have brought healthcare liabilities in the state down from $13 billion over the last two years, though Dr. Scorsone also credits Michigan’s recovering economy for the improvement.
“People should look at it this way, if we can find common sense solutions, to help both retirees and cities get through this, you know, we’re going to free up some resources for critical public services,” said Dr. Scorsone, according to the report.
More articles on finance:
Duke University Health System rakes in record operating income in FY 2015
For-profit hospital stock report: Week of Jan. 25-29
The surprisingly high cost of (preventable) complications
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.
