* 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%
- Andy S. - Friday, Jun 19, 15 @ 3:56 pm:
I am at a loss for words to describe this proposal, because they are all banned on this site.
- Liberty - Friday, Jun 19, 15 @ 4:00 pm:
This is exactly why I voted for a Democrat for the first time.
- Oswego Willy - Friday, Jun 19, 15 @ 4:03 pm:
Rauner won, now he wants what he wants.
- Demoralized - Friday, Jun 19, 15 @ 4:04 pm:
Who could afford this? You may as well not have health insurance at all.
- Anonymous - Friday, Jun 19, 15 @ 4:04 pm:
How would this new proposed plan compare to health insurance plans and contributions typically offered by a private employer?
- Joe cannon - Friday, Jun 19, 15 @ 4:04 pm:
What a great way to driv out tier 1 employees to permit the hiring of pension relieving tier 2 ones. Or privitizing to nonunion NFPs
- Peoria Guy - Friday, Jun 19, 15 @ 4:05 pm:
Lord knows we need radical changes if this state is to recover from the mess we are in. I understand nobody wants those changes to touch them. There are no easy answers
- Norseman - Friday, Jun 19, 15 @ 4:05 pm:
Happy, Father’s Day weekend news. Not really surprised. Rooting for AFSCME to stay firm.
- Politix - Friday, Jun 19, 15 @ 4:05 pm:
Wonder what the actual cost savings to the state is projected. Is it significant or is this another way to stick it to unions?
Most expect insurance premiums to increase, but a jump from 19% to 40% is alarming.
- Casual Observer - Friday, Jun 19, 15 @ 4:06 pm:
And in return he’s offering…? I thought so.
- union employee - Friday, Jun 19, 15 @ 4:07 pm:
I hope unions will not allow this to happen.
- Cassandra - Friday, Jun 19, 15 @ 4:08 pm:
Aren’t employee health costs going up in the private employment sector as well (I’m leaving out the freelancers and contract workers, not sure how they are faring, maybe better than before when many if not most couldn’t even get insurance).
Shouldn’t that be the comparison, not just other government workers. Or is the argument that government workers should be treated differently with respect to health insurance costs. If so, why?
Anyway, want to solve all this? Single payer for the nation. Put everybody on Medicare. Other developed nations have done it.It’s probably coming here too, but maybe not for a few more decades.
- 1776 - Friday, Jun 19, 15 @ 4:08 pm:
So the unions think it’s OK to be “average” in the cost for insurance premiums for workers but it’s not OK for employers to be “average” in Work Comp premiums?
- bloval27 - Friday, Jun 19, 15 @ 4:08 pm:
Wait so is for the State workers this proposal? Or does this also include those who work for AFSCME directly or both? Just curious to know the dynamic of all this.
- Skeptic - Friday, Jun 19, 15 @ 4:09 pm:
Peoria Guy: If AFSCME employees were the cause of this mess, I might agree with you.
- anon - Friday, Jun 19, 15 @ 4:09 pm:
The proposed cost shift is unconscionable and clearly unaffordable for the majority of State workers with families. Another example of Mr. Rauner attempting to provoke a strike if impasse is declared.
- Secret Square - Friday, Jun 19, 15 @ 4:11 pm:
“How would this new proposed plan compare to health insurance plans and contributions typically offered by a private employer?”
Also, how do these drastic changes compare to those typically made by a private employer when costs go up? Do they ever try to make changes that could or should have been made over several years, or even decades, all at once?
- Demoralized - Friday, Jun 19, 15 @ 4:11 pm:
The state has given notice that they do not intend to extend the current contract. I would bet anything that come July you’ll start seeing Executive Orders issued to begin to implement things the Governor wants to include in the contract, including this healthcare proposal. AFSCME is going to spend a lot of time and money in court in the near future. Mark my words.
- Politix - Friday, Jun 19, 15 @ 4:12 pm:
“What a great way to driv out tier 1 employees to permit the hiring of pension relieving tier 2 ones. Or privitizing to nonunion NFPs”
Ask any Tier 1 with more than 10-15 years in if they are planning to quit. Rauner would like nothing more. Forget it.
- Politix - Friday, Jun 19, 15 @ 4:13 pm:
“The state has given notice that they do not intend to extend the current contract.”
They have? I must have missed something.
- Secret Square - Friday, Jun 19, 15 @ 4:14 pm:
“Wait so is for the State workers this proposal? Or does this also include those who work for AFSCME directly or both?”
I take it you mean, “Does this proposal affect all state workers or only those who belong to AFSCME?”
The answer is yes, it affects ALL state workers, union or not — whatever health insurance deal is worked out in the AFSCME contract is applied to everyone. (Unlike the wage provisions, which only apply to those in the respective bargaining units.)
- Anotherretiree - Friday, Jun 19, 15 @ 4:16 pm:
Still no hint if this affects non Medicare retirees. I suspect it does. If you have medical issues, I suggest you address them now. Unless you want Gov Rauner doing your colonoscopy.
- jimk849 - Friday, Jun 19, 15 @ 4:18 pm:
This shows how willing Rauner is to negotiate.
- bloval27 - Friday, Jun 19, 15 @ 4:19 pm:
Ah ok, thanks Secret Square that clears it up.
- Joe cannon - Friday, Jun 19, 15 @ 4:19 pm:
@politix while being snarky my point remains. Anyone who can retire, with no changes to insurance ( kanerva) will have a huge financial incentive to do so. And yes Rauner would be happy
- Anonymous - Friday, Jun 19, 15 @ 4:22 pm:
==Also, how do these drastic changes compare to those typically made by a private employer when costs go up?==
Yes. The year Obamacare took effect many private employers had to raise employee costs significantly (and employer costs also rose significantly)…or they had to drop coverage completely because it was no longer affordable.
- Georg Sande - Friday, Jun 19, 15 @ 4:22 pm:
You know, the folks in this space are resoundingly left and often times state government employees. And that’s okay. But most people in the real world — and in the real Illinois — are neither. So maybe, just maybe, some balanced info. would help before reconstituting the “Governor is a Big Meanie” meme.
We don’t know if previous years’ health costs were subsidized or worse, super-subsidized, by taxpayers. Let’s face it, neither Blago nor Quinn were really negotiating all that much with AFSCME.
So let’s find out BOTH sides before more Leftist nonsense is dispensed, shall we?
- Liberty - Friday, Jun 19, 15 @ 4:22 pm:
These costs are dramatically higher than average (not large employer) in the private sector according to the Kaiser Foundation
http://kff.org/report-section/ehbs-2014-summary-of-findings/
- Demoralized - Friday, Jun 19, 15 @ 4:25 pm:
George:
You forgot to use the word socialist in your analysis. Do better next time.
- john - Friday, Jun 19, 15 @ 4:28 pm:
For those of you mentioning private sector employers; one of the reasons that large public sector employers are compared to each other and not to the private sector is the sheer size of their workforce and retirees covered under the plan. The number of people covered by the plan and the single payor - the State; enables the state to negotiate deep discounts in their plan that most smaller private sector companies could never achieve.
In Illinois, if you include all state and university employees and retirees we are over 100,000 people. Almost no private employers have that large a workforce inside the United States anymore. Illinois is also a contained healthcare marketplace with just a few markets - another way for the employer to negotiate discounts.
No private employers are able to offer insurance companies the insured network size and limited area of coverage as large state and local government employers. That is why you compare large public sector employers to each other and not to the private sector.
- ACA insider - Friday, Jun 19, 15 @ 5:03 pm:
As someone who spent the last 2 years signing people up for Obamacare, and knows the ins and outs, bonuses and mistakes of the law, this gives me the shudders. The ACA was a huge step up for so many people who have been categorically denied health coverage. But it is also mostly unaffordable for low-income workers. And the worst, absolute worst mis-step in the law seems to be incorporated here in Rauners’ demands; unlike the 9.5% affordability provision for employer coverage for the employee themself, there is no provision for what is considered ‘unaffordable’ for dependent coverage. As a result, tons of working people are forced to take their employer insurance for themselves - which might come in *just* under 9.5% of their income - but their spouse’s or kids’ coverage can be 15-20-40% of their income with no exemptions, no subsidies…ultimately no coverage for them. Add insult to injury - then the system assigns them a penalty in their taxes! (which they may be able to waive, *if* you are someone who knows the fine print…) This proposal is in no way sustainable…people will become uninsured. Rauner would be forcing state employees into a high deductible health plan that will ultimately squash them with debt when they get sick.
- Mason born - Monday, Jun 22, 15 @ 8:57 am:
I posted my last comment right before rich closed comments. My last line should read. Not that I agree with it it’s a terrible idea.
- Cynic - Monday, Jun 22, 15 @ 5:02 pm:
So this seems to fly in the face of the state Supreme Court’s ruling in Kanerva vs. Weems, a case heard July 2014, that tested whether State employee/retiree health care benefits can be reduced. The justices ruled that the state constitution’s pension protection clause is “aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.” So how is raising the premiums and deductables to an unaffordable level count as not diminishing promised benefits? Or is this only aimed at current workers leaving the annuitants unaffected? If so get ready for massive retirements.