Mass. towns owe workers $20 billion for health care

NEW YORK Tue Feb 15, 2011 6:53pm EST

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NEW YORK (Reuters) - Massachusetts' largest 50 cities and towns will owe $20 billion to pay for their public workers' health care, an "exploding" cost that could force them to cut services taxpayers need, a new study said on Tuesday.

In Boston, an average single family homeowner would pay an extra $100,000 in taxes over 30 years to meet this health care obligation, estimated the the Massachusetts Taxpayers Foundation, a fiscal monitor.

Until the past few years, fiscal watchdogs and credit agencies mainly focused on whether states, counties, cities and towns could afford to pay the billions of dollars of pension benefits they have promised, but soaring health bills are now drawing the same scrutiny.

This has prompted governors, from New Jersey to Wisconsin, to try to slash these costs by attacking some of the protections unionized public work forces have enjoyed for decades, including their ability to negotiate contracts.

Michael Widmer, the president of the Massachusetts Taxpayers Foundation, in a statement, said: "The exploding costs of employee benefits have already eroded local budgets and forced cuts to basic services -- and municipalities have not even begun to fund retiree health care liabilities."

His $20 billion estimate is the cost in today's dollars of the lifetime health benefits that are owed the 150,000 current and retired public workers in the top 50 Massachusetts communities.

Though several governors have proposed that public workers pay a set percentage of health care insurance premiums, Widmer's group instead recommended capping how much a city or town pays at a set amount.

The remedies advocated by the Massachusetts Taxpayers Foundation also included allowing politicians to "adjust" health plans without bargaining with unionized workers, and raising the minimum age for collecting health benefits to 62 years from 55 years.

(Reporting by Joan Gralla)

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