“You never want a serious crisis to go to waste.” Those are the words of Rahm Emmanuel during his stint as White House Chief of Staff in the Obama administration. In The Wall Street Journal, Allysia Finley explains how Democrats are holding the country’s budget hostage to secure funding for the big blue cities that need to balance their budgets. She writes:
Mayor Rahm Emanuel of Chicago was scrambling to close a $369 million deficit in 2013. The inception of ObamaCare offered an enticing target for cost shaving: retiree health coverage.
The city expected to spend $194 million that year subsidizing health insurance for its retirees, many of whom were too young to qualify for Medicare. Such costs were projected to increase to $540 million by 2023 at the same time as pension payments were ballooning. While courts in Illinois and other states have held that public employee pensions are legally protected, governments have more latitude to make changes to medical benefits.
So Mr. Emanuel dumped his city’s retirees onto the nascent ObamaCare exchanges, where federal subsidies can reduce premium payments. Voilà, Chicago’s $2.1 billion unfunded retiree healthcare liability vanished. Now U.S. taxpayers pick up the tab for Chicago’s retirees in their 50s and early 60s.
Chicago isn’t alone in trying this neat fiscal trick. Detroit, Stockton, Calif., and San Bernardino, Calif., also saved billions by shifting pre-Medicare retirees to ObamaCare when they filed for Chapter 9 bankruptcy in the 2010s. That minimized cuts to workers’ compensation and pensions. Detroit’s $170 million annual retiree healthcare bill made up nearly 20% of its general fund budget, one of the city’s biggest costs.
Other municipalities may move retirees to ObamaCare to avoid layoffs and tax hikes. ObamaCare could soon became a safety valve for underwater cities.
Enter Democrats in Congress, who are refusing to reopen the government unless Republicans agree to extend the pandemic-era ObamaCare subsidies that are set to expire at the end of the year. The news is filled with stories of people who will have to pay modestly more for their insurance, never mind that the feds would still pick up roughly 80% of the cost for a typical plan.
The reality is that extending the sweetened subsidies will encourage more states and cities to follow the lead of Chicago, shifting the healthcare costs of their young retirees to national taxpayers. It’s a backdoor bailout.
Read more here.
