* This AFSCME Council 31 handout to members was scanned by a reader and then converted to text. I’ve tried to correct most of the conversion errors. The original document is here…
Drastically reducing the group insurance benefit for state employees has been a priority for Governor Rauner since Day 1. Even before contract negotiations got underway, the Governor made cutting the state’s insurance plan a pillar of his budget proposal building $700 million in cuts to the group health plan into his budget. Even though his staff admitted in legislative testimony that changes would have to be negotiated with state employee unions, the governor is now demanding that legislators amend the collective bargaining law to ban negotiations over health care benefits.
At the bargaining table, Rauner is pushing for two radical changes to the group insurance benefit which could increase employee costs by thousands of dollars each year: He is proposing to drastically increase the share of the premium paid by employees and drastically increase the out of pocket costs when employees access healthcare.
Rauner wants to double the employee premium contribution to 40% of the cost for single coverage - and to 40% of the cost for dependent coverage too. By federal law, the cost for single coverage is capped at 9.5% of income. However, there is no cap at all on the premium contribution for dependent coverage. This proposal represents a significant change in a number of ways:
1. Currently employees pay a fixed dollar amount toward premiums that is specified in the contract. Moving to paying a percentage of the premium cost means that employee costs would rise each year based on any increase in the state’s healthcare costs.
2. Currently employees who make less pay a little less for health insurance, and employees that make more pay a little more. This proposal eliminates protections for lower paid workers, as everyone will be paying the same amount for group insurance.
3. Increasing the employee premium contribution from 19% (the current average contribution) to 40% puts Illinois outside the norm of other states. The national average for state employee premium contributions is 16%.
Rauner also wants to lower the insurance plan’s value and institute massive cost shifting onto employees through high out of pocket costs. The Administration is proposing a health plan with a 60% actuarial value. This means that on average, the health plan will pay 60% of allowable health care expenses, with the employee paying 40% of the cost through deductibles, copays and co-insurance.
• The current actuarial value of the Illinois group health plan is 93%. This mirrors state employee group insurance plans in other states. The average state government health plan nationwide had an actuarial value of 92% in 2013; the Midwest average is 93%.
• The Administration’s proposal does not include any specific changes to co-pays, deductibles, etc. Rather, it would delegate a committee to develop the new out of pocket costs based on its demand that employees pay a total of 40% of health care expenditures.
These proposed changes to health benefits would move Illinois from average to dead last when compared to other states.
• The Affordable Care Act (ACA) ranks plans as: platinum (best); gold; silver; bronze (worst). 60% actuarial value equates to “bronze” level coverage under the ACA.
• The average bronze level plan for an individual has a deductible of $5,400 and an out-of pocket maximum of $6,350. Bronze level plans would result in staggering and unaffordable cost increases for state employees. These plans have out of pocket costs at or near what is allowable under the ACA:
o $6,600 for single
o $13,200 for family
• 96% of states have a group health benefit that equates to an ACA “platinum” plan (valued over 80%).
• Only two states have “gold” level plans (valued at 80%)
• No other state has an employee health insurance plan with an actuarial value as low as 60%