Almost one-third of Illinois' 79,800 retired state government employees, most of whom pay no monthly premiums for health insurance, would have to fork out between $290 and $500 a month to keep their coverage as part of Gov. Pat Quinn's fiscal 2011 budget proposal.
And retirees' cost for insuring many of their 31,000 dependents would rise by $75 to $430 a month.
The potential changes in retiree health coverage, unveiled this week, are designed to save $255 million on benefits that cost the state $772 million a year.
For many retirees, the new charges would be "totally unaffordable," according to Anders Lindall, spokesman for Chicago-based Council 31 of the American Federation of State, County and Municipal Employees.
"I don't think there's any question that our retirees are going to be upset," he said.
The average state retiree's annual pension is $20,000. Lindall said the increases could cost retirees up to $6,000 a year.
Judy Cacciatori, 57, a Petersburg resident who retired in 2007 after 37 years as an AFSCME-represented clerical worker for the Illinois State Police, called Quinn's proposal "garbage."
"He shouldn't be going after the retirees," Cacciatori said. "It's not right for him to come after the poor people. He's robbing us."
Springfield resident Jody Westerberg, 62, who retired from the Illinois Department of Public Aid in 2003 under an early retirement incentive, said Quinn's proposal would break a promise made by state officials when they pitched the incentive to workers.
No change in benefits - costs or coverage - was "part of the deal," she said, adding that she wouldn't have retired if faced with the premiums Quinn is proposing.
"I think that's outrageous," she said. "We're stuck over a barrel."
No negotiations
Quinn, a Chicago Democrat, proposed the new premiums and a range of other cuts - $2.1 billion altogether - throughout state government to help deal with a record $13 billion state budget deficit.
The governor plans to seek legislation to enact the changes in retiree health benefits.
Lindall said AFSCME believes the changes can't be made without state officials first negotiating the proposal with the union, but Quinn aide Alka Nayyar said bargaining isn't necessary.
"In light of the unprecedented budget constraints and our efforts to dramatically cut costs to get the state back on solid financial footing, there are many difficult decisions we believe will have to be made along the way," Nayyar said.
"The need to make the retiree health-care changes proposed in the budget is great, and we believe we can implement them in a manner that benefits taxpayers without bargaining," she said.
Unlike current state employees, who pay premiums, 90 percent of the state's retired workers pay no premiums, either because of their years of service or the time they retired.
Retirees do pay premiums for their dependents, but those rates also would rise under Quinn's proposal.
For 60 percent of state retirees - those 65 or older who are covered by Medicare and use their state insurance as supplemental coverage - Quinn's plan would institute a $4-per-month premium for managed-care coverage. The charge for coverage through a preferred-provider organization would be $50 per month.
For most retirees who are younger than 65 -30 percent of the total - there would be new monthly premiums of about $290 for individual coverage through a managed-care plan and $500 a month through a PPO.
Most of the remaining retirees -10 percent of the total - already share in the cost of health insurance and wouldn't see their rates change.
AFSCME suit pending
The average total cost to insure a Medicare-eligible state retiree is $347 a month. The average total premium for insuring younger state retirees is $804 a month, said Michael Moss, administrator of the finance division at the Illinois Department of Healthcare and Family Services.
The proposed changes are based on the state's goal of picking up about $300 of the total monthly premium, with the retiree paying the rest, Moss said.
But Lindall said most state retirees' finances are precarious. He noted that 4,000 retirees - 5 percent of the total - dropped their dental coverage last year when the state for the first time instituted premiums of $11 to $19.50 per month.
"It certainly shows that retirees have a very modest standard of living," Lindall said.
Quinn didn't negotiate those premiums with AFSCME before putting them into place. AFSCME filed a grievance to stop the premiums, but lost in an arbitrator's ruling issued Nov. 30.
AFSCME filed suit in February to throw out the premiums. The case is pending.
Westerberg, who is single, said a $500 monthly premium to keep her PPO plan would put a serious crimp in her budget.
"I just won't be able to do anything," she said. "I'll be stuck at home."
Cacciatori, who is single and retired early to help care for her disabled nephew, doesn't know where she would find the money to keep her PPO coverage, but she doesn't want to go without health insurance.
"I'd have to cut elsewhere," she said.
Retiree enrollment in state health plans
Source: Illinois Department of Healthcare and Family Services
Still a relative bargain
Even if proposed changes in state retiree health-care benefits are implemented, the cost to most retirees will remain a relative bargain, according to a Springfield-based employee-benefits consultant.
With premiums of $4 or $50 a month, state retirees 65 and older would be paying at least two-thirds less than what most other senior citizens pay privately for supplemental Medicare coverage, said Drew Davis, president of Springfield's Davis Financial Group.
Davis said premiums for state retirees younger than 65 also would be at or below the average paid by retirees of a similar age outside state government - if they are fortunate enough to work for an employer that offers retiree health benefits.
Most workers at private companies who retire before age 65 aren't offered any health coverage by their employers, Davis said.
Dean Olsen can be reached at 788-1543.
