As some of you may know, when I’m not writing articles on MERA, making charts on the Board of Representative’s voting records, or running for office in special elections, I’m a bankruptcy lawyer, and spend much of my time working on municipal restructurings.
With the benefit of this experience, I submitted an op-ed to the Hartford Courant on what might happen if Congress passes, and Connecticut avails itself of, a bankruptcy law for states. You can find it here:
There is at least one lesson I’ve learned that there wasn’t space to emphasize in the article: while pensions have historically been relatively safe in government restructuring proceedings, retiree health care is not. In Detroit, for example, pensioners faced a pension freeze and nominal dollar cuts of no more than 4.5%, while retiree health benefits were reduced by about 90%—the same as other creditors holding what are known as “unsecured” claims (unpaid vendors and contractors, plaintiffs holding judgment claims, and so on).
So, if you are an employee of a government that is or is likely to be distressed, I would be extra careful about preparing for your health care benefits in retirement, even if the government has promised to pay such benefits.