Pritzker cuts state subsidy to retired teacher healthcare.
When I read in Capitolfax yesterday that Governor Pritzker was planning on announcing a billion dollar tax cut in his 2022 budget proposal I had two reactions.
The first reaction was great. Who isn’t against taxes on food and housing?
The second reaction was why, if the state bank account is so flush, is he cutting the state subsidy to teacher retiree healthcare?
A quick review:
Central Management Services (CMS), a state agency that answers to the Governor, made their annual request to the Teacher Retirement System (TRS) for 2022 funding.
For 2023, the employer’s percentage is reduced from .9% to .67%, a $50 million cut in the teachers’ health insurance fund.
Actuarially, these actions are causing the healthcare insurance fund to become rapidly insolvent. According to an independent actuarial review conducted by the Retired Teachers’ Association, the negative cash flows to the fund will result in a total depletion of the Fund’s assets at some point during fiscal year 2023.
Illinois’ retired teachers pay for their health insurance in two ways.
Because we are not included in Social Security, we pay for Medicare out of pocket.
In order to be insured for all that Medicare doesn’t cover, many retired teachers enroll in a Medicare Advantage (MA) program negotiated through CMS.
Part of the cost of the private MA is subsidized by a fund we paid into before we retired.
That subsidy can only be used by retirees to pay for the privatized secondary MA coverage.
Teachers using only original Medicare get nothing from the state subsidy.
When the cuts were presented to TRS by CMS, the board of trustees voted in favor of the cuts. Only the two elected retiree representatives voted no.
Pritzker is offering a billion dollars in tax cuts.
The reduction to the healthcare subsidy is pennies compared to that.
But that $50 million cut will bankrupt the healthcare fund.
Maybe the Governor can explain his thinking.
I don’t get it.
I am confused, Fred. I thought Kanerva v Weems settled this matter. Surely the governor has been advised. Can you explain what the politicians are thinking, why it's good for them, and how they might prevail?
Yes. It is confusing. What is a settled matter is the issue of diminished pension benefits. And it also seems to guarantee health insurance as a pension benefit that cannot be diminished. In talking to those who are wiser than me, what is not so settled is what the state is responsible for funding. The point of the IRTA lawsuit is to show that the actuarial numbers will force a reduction in what is in the fund and that it will be zero meaning a cost to us and a reduction in the benefit. As to why they want to do this? Beats me.