Devereaux, I think the key here is that describing a situation and breaking down the reasons for its existence are very different. For instance, you mentioned that corporations and unions are major political players. That's true. But the strategies they take, both in the aggregate and as individual entities, can vary widely. That's why breaking down their methods and particular results helps sheds some light on the nature of their influence and how they sustain it.

Curt: Rising health care costs are being reflected in rising premiums. Cities fund various benefits and cover different portions of premiums, but many cities cover 100% of a retiree's premiums for the rest of his or her life. Cities negotiate these terms in collective bargaining agreements with public employee unions -- often different terms for different unions. As premiums have increased, so too have bills to city governments.

Altering benefits offers both political and legal challenges. While one can overcome political challenges, legal challenges present a very gray area. In California, court cases have questioned whether government's can legally alter health benefit terms (e.g. cost sharing, shifting from defined benefit to defined contribution, etc.) with mixed outcomes. In terms of changing benefits, changing them for new hires seems to be the path with the most chance of success, but its impact is limited.

Undoubtedly, bankruptcy changes the game. Stockton completely eliminated its OPEB obligation upon declaring bankruptcy, but employees are challenging that decision in court.  The key question is Need we allow our governments to get to the point of declaring bankruptcy just to manage these costs?

Thank you all for a warm welcome!

Crow's Nest: prefunding in and of itself will not guarantee that these governments will have enough funding set aside to cover the liability. For instance, if they are systematically underestimating the actual size of the liability, even putting away the recommended full amount will leave them short.

She: To piggyback on my reply to Crow's Nest, on this and every other major issue facing 21st century governments, long-term thinking among policy makers will be essential. And at least in California, major short term hits to budgets are starting to highlight this necessity.

Stockton's bankruptcy (which California Common Sense covered here) is a great contemporary example of what actually happens when short-term thinking drives fiscal planning (or a lack thereof). We recognize the lack of long-term thinking and are pushing hard to offer reality checks balanced with workable solutions.