May 20, 2010
Governor Pat Quinn and his Department of Healthcare and Family Services (HFS) appear to have different estimates of how much the State would save under the Governor’s proposal to require all state retirees to pay a share of their health insurance premiums.
In announcing the Governor’s recommended FY2011 budget, his staff said that the State would save about $255 million by limiting the State’s share of each retiree’s premiums to $300 a month. Under Illinois law, the State currently pays all premium costs for retirees with 20 or more years of service.
However, newly appointed HFS Director Julie Hamos testified at an April 20, 2010 hearing of the Commission on Government Forecasting and Accountability (COGFA) that the “net” savings due to the proposal would be $136 million [click here to listen to audio of the proceedings]. HFS later explained that the rest of the $255 million in savings would come from extending the length of time that insurance claims are held before being paid. Unpaid health claims are expected to double to roughly $970 million from the end of FY2010 to the end of FY2011, according to HFS Finance Administrator Michael Moss.
As previously discussed in this blog, Quinn administration officials decided to retool the retiree health insurance proposal after strong opposition from labor unions and legislators. It is not clear what, if any, action will be taken on retiree health insurance costs during the FY2011 budget negotiations.
Employee and retiree health insurance costs are expected to total more than $2.2 billion in FY2011, including both State and participant contributions.