Corporate America is moving rapidly to cut employee and retiree health costs, as evidenced by the recent agreement between General Motors and the United Auto Workers to trim $15 billion from health care over the lifetime of workers, retirees, and their dependents.

Even that may be too little too late. But it’s a lot better than most state and municipal governments are doing. If anything, health care costs are even more out of control in these sectors, thanks to the predilection of politicians for promising benefits they know they can’t afford. Unlike pension systems, there is no requirement for funding future health care obligations.

But the arbiter of government accounting, a nonprofit outfit known as the Government Accounting Standards Board (GASB), is prodding states and municipalities to face up to their health liabilities.Some estimates of unfunded health care commitments run as high as $1 trillion. If funds aren’t set aside now to pay for the future obligations, either insolvency or some huge tax increases are the likely result.

A few municipalities are trying to get ahead of the curve — with eye-popping results. After running the numbers last year, a process that itself took three months, the city of Duluth, Mn. (population: 87,000) estimated that the free lifetime health care offered to city workers, past and present, would cost about $300 million above current costs, or more than double the city’s operating budget.

“We can’t pay for it,” bluntly commented Mayor Herb Bergson to the New York Times. The city, among other things, is raising to 20 years from three years the time an employee must work to qualify for retiree benefits. If unions don’t agree to dramatic reforms, city officials say, they may appeal for a court judgment.

Michigan’s Oakland County, watching health care costs spiral out of control, switched new hires to a system of health savings accounts — essentially a defined contribution plan instead of the old defined benefit plan — that will save it $1 million a year. But last month County Executive L. Brooks Patterson proposed a $500 million bond issue to help fund the already accumulated $800 million in retiree health care costs.

With debt service expected to be about 5.5%, and with the county earning an annual average of 8.38% on its investments over the past 10 years, the county hopes it might be able to pay off the unfunded costs in 20 years. But that’s assuming that future politicians don’t shower new benefits on county employees in return for labor peace.

For poorer jurisdictions the outlook is downright grim.The City of Detroit’s auditor general last year asserted that unfunded health care costs amounted to more than $7 billion, or nearly $8,000 per resident. Michigan as a whole is estimated to have an unfunded government health care liability of $30 billion or so — including a staggering $17 billion for the unionized public school teachers alone.

The teachers union, of course, is bitterly opposed to any cuts in health care funding. It has used its muscle to push many districts into health care policies brokered by an affiliate of the Michigan Education Association. And the union is backing a referendum that would guarantee annual increases in the education budget.

GASB 45, as the new accounting standard is called, doesn’t require cities or states to fund their health care liabilities in advance. They are free to continue on a pay-as-you-go basis if they prefer, ignoring the cost of future commitments. But defenders of GASB 45 hope that public disclosure of the mountainous liabilities will have a restraining influence on future growth in benefits. An even bigger restraint, of course, would be if public officeholders were held to the same level of accountability as Enron’s Ken Lay.

Mr. Bray is a freelance columnist who lives in the Detroit area.