Thousands of government bodies, including states, cities, towns, school districts and water authorities, are in for a shock in the next year or so. For years, governments have been promising generous medical benefits to millions of schoolteachers, firefighters and other employees when they retire, yet experts say that virtually none of these governments have kept track of the mounting price tag. The usual practice is to budget for health care a year at a time, and to leave the rest for the future.

Actuaries say that about 5.5 million retired public employees have health benefits of some kind – and accountants joke that there are not enough actuaries in the country to do all the calculations necessary to estimate how much all these retirees have been promised. Stephen T. McElhaney, an actuary and principal at Mercer Human Resources, a benefits consulting firm that advises states and local governments, estimated that the national total could be $1 trillion. "This is a huge liability," said Jan Lazar, an independent benefits consultant in Lansing, Mich. "If anybody understands it, they’ll freak out."
The Next Retirement Time Bomb – New York Times