Opponents: Rauner insurance changes would hurt state workers, retired teachers

Feb. 18--In presenting his fourth state budget proposal last week, Gov. Bruce Rauner dug into his playbook to recycle ideas that were part of his first budget presentation.

Rauner is again calling for changes to health insurance programs covering public employees and retired educators, something he began in his very first budget in 2015. Both ideas, though, would require legislative approval.

Now, as then, Rauner argues the state can save more than $700 million from the insurance changes he wants to make. That includes $470 million by forcing state workers to pay more of their health insurance costs, $125 million by eliminating a subsidy for the Teachers' Retirement Insurance Program and $4.4 million from eliminating the same subsidy to an insurance program for retired community college employees.

Rauner said another $105 million can be saved by shifting some group health insurance costs to universities.

He couched the changes in a populist message meant to appeal to non-public workers.

"Taxpayers shouldn't have to pay for government health insurance policies that are richer than ones they can afford for themselves," Rauner said. "It's not fair."

Rauner said his budget recommends "right-sizing employee health insurance plans so that government compensation is more in line with what the taxpayers have who are paying for it. Today, we pay almost 90 percent of the premiums for government employee health insurance policies that are way more expensive than plans in the private sector."

Rauner wants the split between the state and workers to be closer to 60/40.

The American Federation of State, County and Municipal Employees, which represents about 38,000 state employees, said the governor's numbers are misleading. The union says the state pays 76 percent of health care costs and employees pay 24 percent, which is the national median according to a 2014 study on state employee health plans by the Pew Charitable Trusts.

The union also contended the cost split in Massachusetts, a state Rauner said Illinois should emulate when it comes to state worker health insurance, is 69 percent/31 percent between employer and employee.

Although the impact of Rauner's proposed changes varies depending on the plan an employee selects and number of dependents enrolled, AFSCME says the changes would increase an average employee's health care costs by $3,700 the first year.

"Unfortunately, Governor Rauner's latest budget rests on recycling well-worn assaults on public service workers and retirees," AFSCME executive director Roberta Lynch said in a statement. "He wants to impose unaffordably high health care costs, undermine retirement security and weaken union rights."

In 2015, the administration said it wanted to change employee health insurance through negotiations with unions, including AFSCME. Since then, negotiations on a new contract with AFSCME have bogged down and the issue is now in the courts.

Consequently, Rauner shifted gears this year on his insurance proposal. He wants lawmakers to approve a bill that removes employee health insurance from issues that can be collectively bargained.

Higher costs would also be in store for enrollees in the Teachers' Retirement Insurance Program if the changes go through, said opponents of the plan. About 77,000 people are covered by the program.

"If the governor's proposal goes through, we would have teachers who have spent nearly all of their lives teaching in public schools plummet into poverty," said Sen. Andy Manar, D-Bunker Hill. "That's not acceptable to me."

Funding for the TRIP program comes from four sources: the state subsidy, local school districts, currently active state teachers and premiums paid by people enrolled in the program. Retired teachers pay premiums as part of the program. The monthly premiums vary widely depending on the plan selected and whether someone is covered by Medicare. Monthly premiums are about $246 for someone up to age 64 who is in an HMO and not covered by Medicare. For the same person age 65 and over the monthly cost is $336. For someone in Medicare, regardless of age, the cost is about $97 a month.

Retiree premiums now cover about 33 percent of the program costs. The state subsidy covers roughly 25 percent of the program cost, money the governor wants to eliminate.

"That would mean current teachers would pay in more, local school districts would pay more and premiums would go up for retirees," said Mary Shaw, legislative affairs director for the Illinois Retired Teachers Association.

The Center for Tax and Budget Accountability said in a report Friday that it believes Rauner's proposed change to TRIP would be found unconstitutional because of another case where the state tried to impose health insurance premiums on state retirees. The state Supreme Court ruled it unconstitutional

Manar said the issue of the state subsidizing the TRIP program was part of endless hours of discussion last year when senators were trying to hammer out the "Grand Bargain" that didn't materialize.

"It (ending the subsidy) was ultimately rejected because retired teachers, by and large, do not make enough off of pensions," Manar said.

Manar said there are some very high teacher pensions that grab headlines, but for most teachers, pensions are modest. Also, teachers do not qualify for Social Security benefits. A significant increase in health insurance costs would eat up their pensions and "toss a whole bunch of teachers into poverty," Manar said. "I think there is bipartisan opposition to (Rauner's idea) for good reason."

Contact Doug Finke: doug.finke@sj-r.com, 788-1527, twitter.com/dougfinkesjr.

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