On Thursday Illinois Governor Pat Quinn signed a bill into law that he said would help ensure that retired, Illinois employees would continue to receive quality health care, while also lowering the cost to taxpayers.
Illinois currently offers free health insurance to retirees after 20 years or more of service, at a time when no other state offers a healthcare benefit of this size.
“Those who have faithfully served the state deserve access to quality health care, and insurance costs should be more balanced and based on actual retirement income,” Quinn said. “We also have a duty to taxpayers to ensure these plans are cost-efficient and put Illinois on the path to fiscal stability.”
Senate Bill 1313 goes into effect July 1 and was passed the General Assembly with bi-partisan support despite opposition from unions representing state employees. The bill was sponsored by state Sen. Jeff Schoenberg (D-Evanston), Illinois House Speaker Michael Madigan (D-Chicago), Illinois Senate President John Cullerton (D-Chicago), Senate Minority Leader Christine Radogno (R-Lemont), and House Minority Leader Tom Cross (R-Oswego).
“This is a year for difficult choices, and passing this bill is the first of many. While I take no joy in the loss of a benefit for hard working retirees, I am proud of our efforts to stabilize the state budget for now and the future,” said Sen. Cullerton.
“I have a lot of compassion for those people who retired anticipating a certain benefit that now may be changed somewhat,” said Sen. Radogno. “Having said that, this is a step Illinois must take to right the financial ship. Without critical reforms, the current structure is unsustainable, and taxpayers are on the hook for programs they cannot afford. Senate Bill 1313 is critical to accomplishing the goal of fiscal stability.”
The purpose of the new law is to increase fiscal responsibility by requiring all state retirees to help with the cost of health care based on their ability to pay, Quinn added.
Currently, retired legislators receive free health insurance after four years, retired judges after six years, and retired state and university employees after 20 years of service. The result is that approximately 90 percent of retirees are not contributing anything for the cost of their health insurance. The annual cost to taxpayers is nearly $800 million. This law ensures the state will be able to continue offering quality healthcare coverage for retired employees, while making healthcare benefits more affordable for taxpayers.
Illinois is among a few states that still offer free health care to retirees. Most states have moved away from such a perk.
Many Midwestern states, including Iowa and Minnesota, do not provide any subsidy for retired employees. Instead, they provide access to their plans and leave the entire cost to be paid by the retiree. Other states offer a very limited subsidy. For example, Florida offers retirees a monthly subsidy of $150, while the retiree covers the remaining cost. While some states utilize a formula similar to Illinois’, where the amount of the subsidy is based upon years of service, no comparable state offers free health insurance after 20 years. This law allows Illinois to continue offering affordable health insurance that is based on a retiree’s ability to pay and length of state service.
How much a retiree will now pay for their health care will be made following labor negotiations and approval by the Illinois Joint Committee on Administrative Rules.
Union leaders said its members are not getting free health care and are worried many retirees will not be able to afford adequate health care.
“This bill jeopardizes affordable health care for state and university retirees,” said Virginia Yates, president of the American Federation of State, County and Municipal Employees Retirees Chapter 31. “The governor saying his action ‘preserves health benefits’ is political doubletalk, and his claim that our health coverage is ‘free’ is false. In fact, seniors like me and 114,000 other retirees and dependents already pay $3,000 a year or more in co-pays, deductibles and premiums.”