NEW YORK (Reuters) - New York City should require its retired public employees to pay for Medicare Part B premiums -- the way all but four states do -- instead of fully reimbursing them, according to a report released on Wednesday by a fiscal watchdog group.
New York City, like many of its metropolitan brethren, switches its retirees to the federal Medicare program from the city's plans when they qualify at age 65.
But the city's cost of Medicare Part B premiums, which pay for out-of-hospital needs, for example, will hit $2.2 billion by 2015 -- a 150 percent increase over a decade, according to a report by the Citizens Budget Commission.
Noting that New York state public workers have had to pay for part of their health insurance premiums since the 1980s, the Citizens Budget Commission, a nonpartisan research group and fiscal watchdog, said in a report:
"If retirees paid for half the cost of their premiums, the City would save $620 million in the current year, growing to over $870 million by 2014."
Many states and cities around the nation, struggling with deficits caused by the recession, are trying to balance their budgets by pruning the costs of their unionized work forces.
This has sparked heated clashes in Wisconsin, where the legality of Republican Governor Scott Walker's law barring collective bargaining was challenged, to New Jersey, where debates over teachers' pay have become a staple part of Republican Governor Chris Christie's town hall meetings.
New York City is in the midst of negotiating labor contracts with most of its unionized workers. Mayor Michael Bloomberg, in his $65 billion budget plan, wants to trim their pension benefits and link wage hikes to higher productivity.
A mayoral spokesman had no immediate comment on the proposal by the Citizens Budget Commission, though in the past Bloomberg has called for union workers to pay a share of their health insurance premiums.
Last week, a majority of voters polled backed various proposals Bloomberg has made to curb labor costs, from reducing pension benefits for new hires to barring public workers from collecting pensions until they turn 65 years old.
In 2009, New York City required teachers to work an extra five years, for a total of 15 years, to qualify for retiree health care. The Citizens Budget Commission said this extension should be required of other public workers.
In 2007, Bloomberg, a political independent, created the nation's first trust fund to help pay for retiree health care, creating a $70 billion liability. But due to the economic downturn following the financial crisis in 2008 and 2009, the mayor and the City Council agreed to withdraw $1.2 billion from the $3.2 billion fund from fiscal 2010 to 2012.
"Depleting the fund for short-term budget relief is short-sighted and neglects the City's long-term fiscal vitality," the watchdog Citizens Budget Commission said.
Reporting by Joan Gralla; Editing by Jan Paschal