Howard Kleinhendler: Pension Reform Is Still A Priority

howard kleinhendlerWhile our Governor and state legislators enjoy their lazy August days at the Jersey Shore, New Jersey’s pressing budgetary shortfalls and woefully high unemployment are not on vacation. Today, our neighbors in New York worked out a pension reform deal that will cut New York state employee benefits and produce a $1.6 billion savings. And, this was done by a Democratic left-wing governor, Andrew Cuomo, with a Republican state senate. Conclusion: treating unions and their members with respect while skillfully negotiating nets results.

Our pension system here in New Jersey is broken. Decades of irresponsible increases to benefits with no matching funding together with gross waste and inefficiencies have left us with a $60 billion liability that we cannot sustain. Permitting government workers to draw two or more pensions –the so-called double and triple dippers — is not sustainable. Nor can we allow perfectly productive and capable people to collect disability benefits when they can find gainful employment. But that’s the easy part. The bigger challenge is managing health care for public workers who are retiring earlier (thanks to our current Governor’s belligerence) and are living longer.

New Jersey cannot get its healthcare house in order until the federal government gets its act together. Obamacare, while perhaps well intentioned, has proven to be a catastrophic failure. It was a compromise bill which did not properly anticipate its financial burden on business. Indeed, one of its key elements –requiring employers to purchase insurance for their workers — has been deemed unconstitutional by several courts. This uncertainty combined with the precarious state of our economy makes us worse off than if we hadn’t done anything in the first place. But, unfortunately, doing nothing is not an option.

Health care costs are now swallowing 22% of New Jersey’s budget and nearly a third of our federal budget. Spiraling costs cannot continue unchecked as the system simply cannot pay for itself. Family doctors and obstetricians are struggling to get by and our gifted youth are not pursuing careers in medicine because you can hardly make a living as a doctor anymore. And who’s making the money? The large corporate HMOs who are posting record profits and are micro-managing our health care decisions to the point where life threatening decisions are not made by people with an M.D., but by those with an M.B.A.

So what do we do? We need to repeal Obamacare and replace it with a far simpler system – the public option. This means that the federal government will sell low-cost insurance to those who want to buy it. Sure, you will not be able to choose your own doctor and you may have to travel a little farther to get care. But you will have a safety net for when you get sick and not have to run to the emergency room for every medical problem. For those who want the freedom to choose their own doctor and have more say in their health care, they are free to purchase private insurance like they do today. There is nothing wrong with rich people being able to pay for better health care if they want to. This is America. We’re a free country and doing well financially is not something to be ashamed of or feel guilty about. The Government program will be funded by the premiums paid by participants with some government subsidy, and because it is non-profit, it will not be burdened by the need to answer to shareholders as the HMOs must do.

This is also good for business. Employers will not be required to do anything. If they want to provide health insurance to their workers fine; they’ll have an option to go the government route or continue with private insurance. Or, they can decide not to provide any insurance at all. While the private HMOs may make less money, they will still do well because many Americans place great importance on being able to control their medical decisions. Further, by eliminating restrictions on operating in multiple states, private insurance companies will be able to pool resources and benefit from economies of scale currently unavailable. In short, private insurance rates will not meaningfully increase merely by virtue of competition from the public plan.

Once these critical reforms are in place, New Jersey will be able to better manage its healthcare obligation to public workers. Workers who want private insurance will have to pay more for that privilege. To those who don’t want to or cannot, they will be able to participate in the public option and still live out their retirement years with dignity and responsible health insurance.

While there will be those naysayers who think anything promoted by the government is bad, we cannot be held hostage by those nearsighted people. Every reputable expert agrees that left unchecked health care costs will not be sustainable by the next decade. Leaving our healthcare entirely to the private sector, which we have done for the past 50 years, is what has created the problem we’re in now. And the reason is simple: healthcare is not the same as selling widgets. Home Depot can throw you out of the store if you don’t want to pay for a power drill. But, a hospital cannot turn you away when you walk in with a heart attack. Those costs are being absorbed by every New Jersey taxpayer and cannot go on. We’re far better off getting that heart patient to a doctor for preventive care so he doesn’t end up in the emergency room in the first place. The public option is the only viable plan, and the faster it gets done the better off we’ll be.

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  1. Saying that the govt should provide health insurance is saying that the govt is the solution. Since when does the govt do anything right. Think medicare medicaid social security etc and you want to give them health ins? The govt is the problem not the solution.

  2. You should have entitled this Heath care reform instead of pension reform.
    Just remember politicians from both sides of the isle state and local stole from the highest funded pension system in the nation to keep taxpayers happy with artificially low taxes and homestead rebates.
    Our current Governor continues this pillaging by refusing to fully fund the system while every public worker has contributed every penny they have been required to. Politicians who want accountability, our Governor included, need only to look in the mirror. The blame game for them is easier that the fix.
    And yes, multiple dippers such as former State senator John Bennett , a Republican, who collects over $95,000. a year should not be allowed. One job, one pension.

  3. I get it.

    the way to lower heath costs is to have the government offer a cheap option. that will then be offered free to everyone who can afford it. and will then require taxes to fund it.

    I especially really like the line “with some geovernment subsidy”.

    that has worked well for social security. i am sure it will work just as well for healthcare.

  4. I don’t understand how health cares is a RIGHT. If someone else (a Dr.) Has to provide it how can it be a right for you to receive his service?!

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