Gov. Quinn must be bold on retiree health benefits

Early this morning, Gov. Quinn signed Senate Bill 1313. That bill turns over authority of setting health insurance premiums for retired state and university workers to the Governor’s office. It’s still unclear what Quinn plans to do with that power or how much he intends to save. But one thing is certain: Gov. Quinn needs to be bold....

Early this morning, Gov. Quinn signed Senate Bill 1313. That bill turns over authority of setting health insurance premiums for retired state and university workers to the Governor’s office. It’s still unclear what Quinn plans to do with that power or how much he intends to save.

But one thing is certain: Gov. Quinn needs to be bold. We can’t afford to tinker around the margins. Taxpayers already owe $54 billion for retiree health benefits. As our newest report shows, that’s about a quarter of total state and local retirement debt.

That’s why we’ve shared our comprehensive plan for reforming retiree health benefits with the Governor. Our plan would reduce the state’s retirement debt for health benefits by making modest changes to ensure the system is both fair and practical. These reforms include:

• Benchmarking benefits to other states. The average government retiree in other states pays a majority of the cost of their health insurance. This is still a far more generous benefit than retired private sector workers receive. Starting this year, premiums for state pensioners should be be set on a sliding-scale, according to retirement age, years of service and pension income. This would reduce this enormous burden on taxpayers, while still rewarding employees for lifelong service, discouraging early retirement and protecting low-income retirees.

• Capping subsidies for early retirees. Many government workers retire before reaching the traditional retirement age. The state should stop rewarding these workers for choosing to retire early. Moving forward, the state should cap subsidies for all new retired workers at the same level the state pays for Medicare-covered retirees.

• Ending subsidies for future employees. Private sector workers are rarely offered health insurance in retirement. When they are offered coverage, many have to pay the full cost of their premiums. Because the state has already increased the “full benefit” retirement age to 67 for future employees, it should end these subsidies, as well. These new employees will be Medicare-covered by the time they are able to collect their full benefits, making the state’s supplemental coverage largely unnecessary and even further out of sync with the private sector.

Gov. Quinn has the power to ease the burden on taxpayers. The only question left is: how will he use it?