Walker: Chicago Says Yes To Debt Reduction, Why Not Bridgeport?

Bridgeport resident David Walker, former U.S. comptroller general, says he’s offered financial solutions to city government that have fallen on deaf ears, including suggestions for reducing crippling debt. On Monday Walker wrote an opinion piece published in USA Today that highlights the cost savings Chicago Mayor Rahm Emanuel, former chief of staff to President Obama, plans to follow in the federal Affordable Care Act. Walker says his suggestion “fell on deaf ears in Bridgeport, but apparently Chicago was listening. It takes intelligence and fortitude to pursue this approach and Mayor Emanuel has both. We are still looking for either in Bridgeport.”

News release from the community action group Citizen Working For A Better Bridgeport:

Former US Comptroller General David Walker’s Innovative Debt Reducing Ideas Are Being Implemented in Chicago; Why Not Bridgeport?

In an opinion piece penned for USA Today on June 10, 2013, former US Comptroller General David M. Walker reported that Chicago Mayor Rahm Emanuel plans to parlay the health insurance exchanges created by the Affordable Care Act into an opportunity for significant cost savings for Chicago. Mayor Emanuel estimates that it could save his City’s taxpayers $800 million over time.

Dave Walker offered the idea to Bridgeport’s City Council in April as a means to reduce the City’s huge unfunded retiree health obligations and to keep Bridgeport’s gargantuan tax rate from increasing once again. Within its structure, the Affordable Care Act also provides a means for state and local governments to shift some of the ever increasing retiree health care costs as to the exchanges and the federal government.

Walker’s suggestion, which he has made in prior speeches, “fell on deaf ears in Bridgeport, but apparently Chicago was listening. It takes intelligence and fortitude to pursue this approach and Mayor Emanuel has both. We are still looking for either in Bridgeport.”

Walker USA Today op-ed:

Oct. 1 is a focus of increasing anxiety in this country. That’s the date when enrollments begin for the federally run health insurance exchanges, created under the Affordable Care Act.

No one really knows what to expect, but the rollout could prove far worse than advertised for a reason that has more to do with the federal deficit than health care.

We all know the questions about the new health law: Will employers dump their current health care plans and pay the relatively modest fine? Will young people opt out of the exchanges driving up premiums for others? Will the ultimate cost far exceed the official projections? But almost no one has been paying attention to the opportunity that the exchanges could open for state and local governments’ retiree health care programs.

Chicago Mayor Rahm Emanuel is among those who have.

Last month, Emanuel announced plans to move city retirees onto the exchanges, as a way to offload an $800 million shortfall in retiree funding. There’s reason to think that other state and local governments will follow suit. If they do, the consequences could be far-reaching.

States in a deep hole

We already know that many state and local governments are in a financial hole that keeps getting deeper. A newly released report by the U.S. Government Accountability Office makes clear that, absent significant reforms, the fiscal picture for most state and local governments will steadily worsen through 2060.

A main cause, in addition to Medicaid, is the cost of health care for state and local government retirees.

Unlike Washington, state and local governments can’t just print money to pay their bills and typically have “balanced budget” requirements. More often than not, retiree health benefits are not guaranteed under state constitutions, are not insured and are not protected by federal law, which means the systems in place can be changed.

States that offer generous health benefits for government retirees, and which have set aside little or nothing to pay for those future costs, could choose to move their retirees into the exchanges. State and local governments would likely continue to contribute by paying some premium support to individual retirees, but the federal government and/or participants in the exchanges would pick up much of the tab.

For these states, the exchanges offer a chance to shore up their finances and relieve state taxpayers of some of the looming burden of financing all those retirees.

Reward for irresponsibility

A significant portion of the tab would be passed on to the federal government, effectively shifting the burden to Americans in other more fiscally responsible states.

Moreover, the cost of the exchanges could grow precisely because more retirees are joining the pool. And if young people forgo the exchanges in large numbers, it will put upward pressure on insurance premiums over time.

Risks and opportunities

So the impact of the insurance exchanges could be good news for some state and local governments and residents, like those in Chicago, while not so good news for the rest of us. As with so many major federal initiatives, the outcomes are far from certain. That is particularly the case with the Affordable Care Act, which rivals some of the New Deal legislation in its complexity.

At the very least, however, we should recognize both the risks and opportunities–including what could unfold at every level of government–and be prepared for the results.

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19 comments

  1. Chicago has not said YES to debt reduction because they can’t until October; Bridgeport has never said NO for the same reason.
    David Walker’s idea did not fall on deaf ears as he insists, because it’s still too early to decide. Every municipality in America is searching for a cure. However, “cost shifting” is only a temporary cure and avoids the problem.

    1. Republicans in Congress are at it again. Thursday will mark the 37th vote taken in the House to repeal the Affordable Care Act that was set into law in 2010. So now we are going to do “cost shifting.”

  2. Sorry, Local Eyes. Everything Walker stated is thought-filled and truthful. Everything you state is reactive and unfounded. It is people like you who have kept Bridgeport from achieving promise, prosperity and prominence. We are blessed to have David Walker interested in our future.

    1. yahooy, maybe you should step back from your Walker worship. Local Eyes made a thoughtful criticism. Dave Walker is concerned with privatization … why else would he be praising Paul Vallas who is being supported by the very Finch administration he claims to want to remove? Hardly a leader who wants to lead B’port out of the wilderness.

        1. Gee, you broke my heart. Are you going to tell me your unquestioning praise of Dave Walker is valuable? Ask Dave about his time at Arthur Anderson.

          1. And I find it really interesting he has been a guest on the Pat Robertson show. Walker should pick better friends.

          2. Here is your idol speaking nostalgically about debtors’ prisons … ah the good old days …

          3. BRG! He’s back and driveling on with his nonsense. But wait, he doesn’t live here anymore, so why does he keep at it? David W., please pay no attention to the Wicked Witch of the West. We reformers in Bridgeport are so excited about the breath of fresh air, expertise and ideas you bring to this beleaguered city of one-party, corrupt leadership.

          4. Ron, it certainly could have been. I bet a lot of Walker’s fans are also fans of Limbaugh.

  3. It is one of many ideas worth exploring, but far from a slam dunk. Alas, this administration seems to be afraid of anything except the status quo.

  4. An interesting read. I don’t know how much a burden shift will significantly impact our current burdens, but it’s certainly a concept that should at least be discussed and reviewed by the council.

    1. Brick: Our illustrious City Council was presented with these options. There is just no one on the Council who knows enough about Financial Management to recognize an opportunity when it slaps them in the face. That point taken, in order for the City of Bridgeport to avail itself of this benefit structured into the AFA, there are probably reporting and audit requirements the City would need to comply with. Now, for the City of Bridgeport we know THAT just won’t do. Can anyone confirm the need for a financial audit or investigation in order to relieve debt burdens in this manner with the AFA?

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