pages: CityCouncil/2008-01-15.pdf, 10
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CityCouncil | 2008-01-15 | 10 | would be the result on the calculations by assuming a 4.5% medical inflation rate after 10 years. Mr. Bartel responded healthcare becomes 100% of the Gross Domestic Product (GDP) if healthcare continues to grow in the high single or low double digits and general inflation is 3% the scenario of doing nothing means having natural market forces controlling healthcare costs which results in private sector entities dropping healthcare coverage the end result would be 50% of the population uninsured something would need to be done; the actuarial accrued liability might be 30% higher if the grade is increased from 4.5% to 6% accounting standards suggest that an evaluation every two years for agencies that have more than 200 participants. Mayor Johnson stated a two-year evaluation is fine, but the chart should not go out as far as it does based on a 4.5% medical inflation number; assuming that the federal government will adopt a national healthcare plan is very optimistic. Mr. Bartel stated that he is reluctant to project beyond a ten year period in terms of actual dollars; he cannot predict what will happen ten years from now. Councilmember Matarrese stated that Pay-As-You-Go could be much more expensive than pre-funding with a fund that starts having a return from investments. Mr. Bartel stated Pay-As-You-Go is similar to how social security is funded today; a check is written when the payment is due; social security has a trust fund; the trust fund will run out in approximately 15 years; tax dollars will not be sufficient to pay for expected benefits; social security is funded by a quasi pre- funding; CalPERS and private sector retirement systems require that money be set aside so that there is money in a trust and the money will be there as people retire; the City has entered into a contract with CalPERS to pre-fund benefits. Councilmember deHaan stated many municipalities have addressed the issue. Mr. Bartel stated that he has performed approximately 150 evaluations; he predicted that four out of five of his clients would not do any pre-funding four or five years ago; he was wrong; the majority of his clients do not have the budget ability to pay the full Annual Required Contribution (ARC) immediately; he is convinced that most of his clients will either phase into paying the full ARC or adopt a standard of putting something aside so that Regular Meeting Alameda City Council 10 January 15, 2008 | CityCouncil/2008-01-15.pdf |