Illinois House Moves Against Retiree Benefits

We’re posting the text of an article from the State-Journal Register about the bill in the State Legislature to cut the health benefits of state retirees.  Basically, the bill does away with subsidies for retirees’ health care premiums.  Most SURS retirees with twenty years of  service or more count on a full subsidy for their premiums.  This is especially important in the years before they are eligible for Medicare.  If you are a retiree, or ever thinking of retiring, this bill affects you.  Contact your senator today, and plan to attend Lobby Day in Springfield on May 15th.

House votes to end free health insurance for state retirees

By DOUG FINKE (doug.finke@sj-r.com)

The State Journal-Register

Posted 5/9/2012

State retirees who now receive premium-free state health insurance would have to start paying for their coverage under a bill that cleared the Illinois House Wednesday.

The House vote was 74-43. The bill now goes to the Senate.

Many retired state and university workers, lawmakers and judges now pay no health premiums. Senate Bill 1313 would also apply to a small number of retired teachers. Most retired teachers are in a separate health insurance plan for which they pay premiums, although Gov. Pat Quinn wants to end a state subsidy to that program.

House Speaker Michael Madigan, D-Chicago, who sponsored the bill, said requiring retirees to pay health premiums is a small part of the painful budget decisions lawmakers will have to make this year.

“We are being called upon to administer some real tough medicine all through this session,” Madigan said. “If we can’t do this bill, what are we going to be able to do (on the others)? This is one small part of it.”

Madigan said retiree health insurance costs the state $800 million a year, and 90 percent of retirees pay no premiums for their own coverage. Retirees do pay for dependent coverage, co-payments and other out-of-pocket expenses.

In general, state retirees are eligible for premium-free health insurance after 20 years of service. Madigan said no other state offers a benefit like Illinois’.

Area reps vote no

All but one of the Springfield area’s representatives voted against the bill, including Raymond Poe, R-Springfield, Rich Brauer, R-Petersburg, Jim Watson, R-Jacksonville, Wayne Rosenthal, R-Morrisonville, and Bill Mitchell, R-Forsyth. Rep. Jil Tracy, R-Quincy, voted in favor of it.

Poe said he might have been able to support the change if the bill detailed how much employees would have to pay. Poe said he’s heard from retirees who understand premium payments might be necessary, but are worried about the amount.

“You’re betting blind,” Poe said. “Why didn’t we see the numbers? If it was fair, I probably could have voted for it.”

The bill provides that the Department of Central Management Services would determine retiree premiums each year. Lawmakers on the Joint Committee on Administrative Rules would review the rates and could overrule them.

In a letter to House Minority Leader Tom Cross, R-Oswego, CMS director Malcolm Weems wrote that retiree premiums would be based on a retiree’s pension benefits. Those with higher pensions would pay more for health coverage, he wrote.

The letter also said retirees eligible for Medicare “will pay significantly less than those (generally younger and still working) who are not.” Retirees eligible for Medicare – generally those 65 and older – cost the state insurance plan much less than those who are not, Weems said.

Cost squeeze

Cross said continually rising costs for employee benefits will squeeze out the state’s ability to pay for basic services like education, he said.

“For years, the state has made commitments it cannot keep,” Cross said. “This represents a long overdue assessment of retiree health insurance. It is no longer something we can give people for free.”

Rep. Mike Bost, R-Murphysboro, agreed.

“We’re up against the wall now,” Bost said. “If we don’t start becoming very sensible with the operations of the state, we may have to cut services to the mentally ill or those who are physically disabled because certain ones throughout the state who have a large pension don’t want to fund part of their health care.”

Rep. Frank Mautino, D-Spring Valley, said thousands of people left state government under early retirement incentives believing the health insurance benefit would remain as it was and that it was a contractual right. He voted against Madigan’s bill.

Rep. Jim Sacia, R-Pecatonica, said he is concerned about whether retirees will be able to pay the new premiums.

“The easiest thing in the world is to go after retirees,” Sacia said, before voting in favor of the bill.