Jonathan Ingram Director of Health Policy and Pension Reform
Earlier this year, Gov. Quinn signed into law Public Act 97-0695. That law turns over authority of setting health insurance premiums for retired state and university workers to the Governor's office. Despite the fact that the bill was sent to the Governor more than four months ago, he has yet to exercise his new authority to set premiums.
We shared our comprehensive plan for reforming retiree health benefits with the Quinn administration earlier this year. Our plan, which Gov. Quinn is free to adopt under Public Act 97-0695, would save state taxpayers more than $437 million this year alone. Our proposal makes modest changes to ensure the system is both fair and practical, by benchmarking health benefits to what government workers in other states receive in retirement.
The average government retiree in other states pays a majority of the cost of their health insurance. This is still a far more generous benefit than retired private sector workers receive. The state can implement these premiums on a sliding-scale, according to retirement age, years of service and pension income. These changes would reduce this enormous burden on taxpayers, while still rewarding employees for lifelong service, discouraging early retirement and protecting low-income retirees.
The fiscal year is already 103 days in. That means Gov. Quinn has wasted $124 million by delaying the implementation of Public Act 97-0695. Every day he fails to act, he wastes another $1.2 million.
Gov. Quinn has the power to ease the burden on taxpayers. When is he actually going to use it?
The Quinn administration has defended its delay by claiming that Public Act 97-0695 explicitly requires that retiree health insurance premiums be set through collective bargaining negotiations and only then can they be approved through administrative rulemaking. In other words, until Gov. Quinn reaches a deal with AFSCME, he says he can't implement the law.
The only trouble with this answer? It's not true. You can read the law for yourself here. The language is very clear:
[T]he Director of Central Management Services shall, on an annual basis, determine the amount that the State shall contribute toward the basic program of group health benefits on behalf of annuitants, survivors, and retired employees. ... The remainder of the cost of coverage for each annuitant, survivor, or retired employee, as determined by the Director of Central Management Services, shall be the responsibility of that annuitant, survivor, or retired employee.
Note that nothing in this language requires the state to negotiate with collective bargaining units over these changes. And there's a good reason for that. You see, this isn't the first time that changes have been made to retiree health premiums. Back in 2009, the Quinn administration started charging premiums to retired workers for their dental insurance coverage. To absolutely no one's surprise, AFSCME Council 31 filed a grievance and eventually sued.
So what happened? The grievance was dismissed by the arbitrator, because retirees are not members of the bargaining unit, and thus are not parties to any collective bargaining agreement. Dissatisfied with the result, AFSCME sued to overturn the arbitrator's decision. The circuit court dismissed the case, finding that the arbitrator's decision was not contrary to law, noting that the "case law is clear that retirees are not parties to collective bargaining agreements."
Because AFSCME also filed a claim with the Illinois Labor Relations Board, the court stayed all further proceedings on other issues AFSCME was challenging. The court's decision was later upheld on appeal, and the ILRB case is being held in abeyance, with no hearings scheduled. CMS continues to charge dental premiums.
And while it is true that premiums will ultimately need to be set by administrative rule-making, the law makes clear that such changes shall be made by emergency rule, in order to expedite the process. The Quinn administration has made no attempt to implement the law through its emergency rulemaking authority.