By Jamey Dunn
Gov. Pat Quinn said he plans to sign legislation that would make many state retirees pay more for their health care.
Currently, most retired state workers do not pay premiums for their health care, and supporters of Senate Bill 1313, which passed in the Senate Thursday, say it is a benefit that the state can no longer afford. “If we don’t act now, current retires and those who will be retiring in the future will be unquestionably faced with higher health payments and a severe reduction of benefits. Our current approach to this issue is simply unaffordable and unsustainable,” said Sen. Jeffrey Schoenberg, an Evanston Democrat. The measure passed in the House on Wednesday.
Retirees earn those benefits based on years spent on the job. But under SB1313, the Department of Central Management Systems would instead set the amount that the state proposes to pay, and the rest of the cost would be made up by retirees through premiums. The state is expected to pay more than $800 million for the benefits this fiscal year. Quinn said the premiums would be means tested and determined by a number of factors, including how much each retiree receives in pension benefits and how long he or she worked for the state. Once retirees become eligible for Medicare, their premiums would decrease.
Quinn said in a written statement that he would sign the bill, but he did not say when. If he signs it soon, the measure would go into effect July 1. “I am encouraged that legislators have taken this step towards restoring fiscal stability to Illinois. This legislation will help ensure that our retirees continue to have access to quality health care, while also lowering the cost to taxpayers,” he said.
According to Schoenberg, CMS would still bargain with the American Federation of State County and Municipal Employees over retiree health care benefits. The deal reached would apply to all state and university employees. Schoenberg said that AFSCME would handle the negotiations because the union represents the largest portion of workers. Supporters say this measure would simply allow CMS to bring a number to the table that reflects the state’s budget reality. The legislature's Joint Committee on Administrative Rules also has to sign off on the number.
“It will be a collectively bargained retiree benefit,” said Robb Craddick, who is deputy director of labor relations for CMS and the chief labor negotiator for the state. “The intent of this legislation is to allow the Department of Central Management Services to negotiate a means-based plan.” Craddick said that if JCAR rejects the number, then AFSCME and CMS would return to the table.
“I support and respect the collective bargaining process. … These benefits are going to be collectively bargained. So I certainly hope that in the public discussion, there’s no representation that it’s going to be anything but that,” Schoenberg said.
But union officials say the plan impedes the collective bargaining process and allows CMS to arbitrarily set the amount the state would pay. John Cameron, director of political and community relations for AFSCME, said state retirees already pay some health care costs through copays and deductible. He said that the average employee receiving basic health care services, which excludes treatment for chronic illness, pays about $3,000 a year.
Cameron argued that while working, retirees gave up other things through collective bargaining, such as raises, as a trade off for their paid health care. “The health insurance is a benefit that was earned. It’s not a perk, it’s not a privilege, it's not a giveaway,” he said. “While working members, they negotiated to make sure that their retiree health care benefits were affordable. And as a consequence, they took less in salary, less in wage increases. That reduced their pension, so they have less [retirement] income. But again, they were operating under this framework that they were guaranteed affordable health benefits.” He said that the new plan does not give retirees a way to predict what their health care costs would be from year to year.
Cameron said the rising cost of health care is a serious issue, but he said the proposal does nothing to address that problem. “Let’s be clear: What we’re doing here is both breaking a promise to those retirees and shifting the cost of that health care liability onto their shoulders. We’re not reducing it. We’re not eliminating it. It remains unaffordable, but we have decided to stick the bill to those who can least afford it.”