Wednesday, May 09, 2012

House votes to scale back public retiree health benefits

By Jamey Dunn

Retired public workers in Illinois may have to shell out more for their health care.

The House today approved Senate Bill 1313. The measure allows Central Management Systems (CMS) to set the amount that the state would pay for retiree health care benefits. The rest of the cost would be covered by retirees through premiums. Currently, many employees do not pay a premium for health care after they retire. This year, the state expects to pay more than $800 million for retiree health care

“Not only are these benefits unaffordable, given today’s fiscal situation, but they are far more generous than those provided by other governments to their employees and those provided by the private sector,” said House Speaker Michael Madigan, a sponsor of the bill.

After CMS, an agency under the governor, sets the amount the state would contribute, the legislature's Joint Committee on Administrative Rules would have the option to reject the number from CMS. Gov. Pat Quinn intends to decide premiums based on a sliding scale. “The scale is based on (1) length of service, and (2) ability to pay," said a memo from CMS that was entered into the record with SB 1313. "The percent of cost the retiree will pay will also be based on his or her pension level. Pension amounts will be broken up into seven tiers; the higher the tier, the more the retiree will pay,” According to the memo, retirees on Medicare would pay “substantially less” than those not eligible for Medicare.

Union officials say that while many retirees do not pay premiums for themselves, they do pay copays and deductibles, along with premiums for family members who are covered on their plans. The American Federation of State County and Municipal Employees Council 31 estimates that retirees with average health care needs, meaning no chronic illness or long term hospital stays, pay an average of $3,000 per year for health care.

Opponents said that the state would be increasing costs to retirees on fixed incomes without properly exploring all options of giving them enough chance to have their voices heard. “They all were under the assumption that this was a benefit that they could rely upon, and they feel that the state has sold them out,” said Rep. Robert Pritchard, a Hinckley Republican.

However, Madigan said he viewed the issue more as a budgeting move than a labor relations concern. “Although there are differing opinions in the area of pensions, there really is no disagreement in the area of health care. The health care is not contractually or constitutionally guaranteed. It can be changed or eliminated,” Madigan said.

 Henry Bayer, executive director of AFSCME Council 31, said that he is worried about the future of retiree health care being determined by the Quinn administration. “They have put the fate of tens of thousands of retired public servants in the hands of the governor,’ Bayer said. “We’re seen how this administration has botched so many things.” Bayer said that most retired state employees have relatively modest pensions, and increased health care costs, coupled with potential reductions in pension benefits, would make it harder for retirees to make ends meet. “This would just make it more difficult for people who retire from the state of Illinois or from a public university to have a livable income in retirement. [Some lawmakers] want to cut their [pension] income and ask them to pay more for their health insurance,” he said. “That’s a bad deal all around and not something you would expect Democrats to be doing.”

 But House Republican Leader Tom Cross said that both pension and retiree health care benefits must be scaled back to save both systems from collapse. “We fall into this trap of believing that that can’t happen in this country,” Cross said.


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