Chicago’s Emanuel Raises Retiree Health Premiums By 40 Percent

In July, the Illinois Supreme Court ruled that subsidized health care premiums for state retirees were protected under the Illinois Constitution.

But Chicago Mayor Rahm Emanuel challenged that ruling Friday when he increased health insurance premiums for city retirees by 40 percent. The move is part of an ongoing effort to decrease the numerous retirement-related costs that weigh heavily on Chicago’s finances.

Reported by the Chicago Sun-Times:

Mayor Rahm Emanuel on Friday dropped another financial bombshell on Chicago’s 25,000 retired city workers and their dependents: their monthly health insurance premiums will be going up by a whopping 40 percent — in spite of a pending lawsuit and a precedent-setting Illinois Supreme Court ruling.

Last year, Emanuel announced plans to save $108.7 million a year by phasing out the city’s 55 percent subsidy for retiree health care and forcing retirees to make the switch to Obamacare.

For the city, the Year One savings was $25 million. For retirees, that translated into an increase in monthly health insurance premiums in the 20 percent and 30 percent-range.

On Friday, city retirees and their dependents got hit again — only this time, even harder. The city notified them of a 30-percent to 40-percent increase that will cost most of the retirees between another $300 to $400 a month.

Retirees and other observers expressed genuine surprise at the move, especially because it comes on the heels of a court ruling that appeared to protect against such policy actions. From the Sun-Times:

The [40 percent] increase stunned Clinton Krislov, an attorney representing retirees in a marathon legal battle against the city and not only because health care costs appear to be “flattening,” as he put it.

What’s even more surprising is the fact that Emanuel is forging full-speed ahead with his phase-out of the 55 percent city subsidy, in spite of a July court ruling that could tip the scales against the city.

The Illinois Supreme Court ruled then that subsidized health care premiums for state employees are protected under the Illinois Constitution and that the General Assembly was “precluded from diminishing or impairing that benefit.”

City retirees have a similar lawsuit pending that Krislov expects to result in a similar outcome.

“Restraint might have been called for until the case is over, but restraint doesn’t seem to be the plan here. The plan is to wean retirees off the city subsidy and have them off entirely by Jan. 1, 2017,” Krislov said late Friday.

The city released a statement Friday, saying the increased premiums would help to “right the city’s financial ship.”

Emanuel has promised to avoid raising taxes, particularly property taxes, before this year’s election.

Photo: Pete Souza [Public domain], via Wikimedia Commons