Last week, Illinois Governor Pat Quinn signed a bill requiring retired state employees, including judges and legislators, to pay a premium toward their health care insurance. This is part of the plan for the financially-troubled state to unburden itself from part of the $800,000 health care insurance bill it pays annually, while still providing former employees with quality coverage.
This legislation puts an end to years of free health care coverage for some 78,000 retired state workers, who were not required to pay premiums after a requisite number of years of service to the public. Compared to other states’ retirement benefit plans, Illinois has had one of the most generous, offering no premium health care to university and state employees after 20 years of service, judges after six years, and legislators after four years.
With the estimated budget of retiree coverage for next year approaching $1 billion, bipartisan lawmakers recognized the urgent need to rein in spending. According to Republican Senate Minority Leader Christine Radogno, the pre-existing plan is “unsustainable and tax payers are on the hook for programs they cannot afford.” Democratic Senator Jeff Schoenberg agreed that retiree-paid premiums are “absolutely necessary to protect the quality and affordability of health insurance” for retirees.
Governor Quinn acknowledged that the state made a promise to state employees to provide quality health care in their retirement, but that quality must be balanced with insurance costs “and based on actual retirement income.” He also recognized a duty to Illinois taxpayers “to ensure these plans are cost-efficient and put Illinois on the path to fiscal stability.”
The amount of each retiree’s pension will dictate the amount he or she will have to pay in health insurance premiums, with seven tiers of pension amounts established. Higher pension amounts will correspond with higher premium amounts although the rates will not be determined until labor negotiations and legislative oversight panel approval have occurred.
Public employee unions have opposed the bill, claiming that the state is going back on promises made to retirees while simultaneously giving tax breaks to large corporations such as Sears Holdings and CME Group. Virginia Yates, president of the retirees’ chapter of the American Federation of State, County and Municipal Employees criticized the move, stating, “The Governor saying his action ‘preserves health benefits’ is political doubletalk, and his claim that our health coverage is ‘free’ is false. [Many retirees] already pay $3,000 a year or more in copays, deductibles and premiums.”