Ready for some more bad news?
Wednesday, May 11, 2016 - Posted by Rich Miller
* From the folks at Pew…
Hi, Rich-
Today, The Pew Charitable Trusts released the new report, “State Retiree Health Plan Spending: An examination of funding trends and plan provisions.”
The report assesses states’ OPEB liabilities (liabilities for retiree benefits other than pensions) and funding trends, as well as how they are affected by aspects of state retiree health plans.
Because retiree health insurance benefits account for the majority of states’ OPEB obligations, many states have enacted policy changes to address these looming obligations. The report finds that states’ strategies for addressing OPEB liabilities vary greatly and that the methods states choose to contribute to their retirees’ health insurance premiums substantially affect the size of their OPEB liabilities.
More detailed findings can be found in the full report, here: http://pew.org/1TCTMhV
Pew also released today a related issue brief with a more focused look at state OPEB assets and liabilities; that brief can be found here: http://bit.ly/24Lqtlf
Lauren Dickinson
Associate, Communications
The Pew Charitable Trusts
* From the report…
States’ OPEB liabilities decreased 10 percent, to $627 billion, between 2010 and 2013, after adjusting for inflation. This drop resulted from lower rates of growth in health care costs and changes states made to their OPEB funding policies and retiree health plan provisions.
State-funded ratios—representing the amount of assets states have set aside to fund their OPEB liabilities—increased from 5 percent in 2010 to 6 percent in 2013. However, this trend varied greatly among states—the funded ratio of eight states decreased, and Oregon increased its funded ratio by 25 percentage points.
Illinois, of course, is not part of either trend. Our OPEB liabilities went from $43.9 billion in 2010 to $56.3 billion in 2013 - which looks to be about the biggest increase in the nation.
Michigan’s liabilities dropped from $45.5 billion down to $25.5 billion during the same time period, and they had an 11 percent funded ratio. Our funded ratio is zero because we don’t set aside any money.
By the way, Illinois’ population is about 4 percent of total US population, but our OPEB liabilities are almost 9 percent of total US.
- RNUG - Wednesday, May 11, 16 @ 10:58 am:
No surprise. This is why Rauner / CMS forced all Medicare eligible retirees to one of several Medicare Advantage programs; it drastically reduced the State’s costs compared to previously and increased out of pocket for retirees. They would do it to the under 65 retirees if they could.
- Union Man - Wednesday, May 11, 16 @ 11:04 am:
Educate me… If everyone in America goes on Medicare at age 65, how much does the state pay for those retirees? It certainly has to be less than for state employees.
Curious minds want to know.
- Walter Mitty - Wednesday, May 11, 16 @ 11:07 am:
Can someone explain how TRS obligations will actually be paid? If a state can’t declare bankruptcy, then can someone explain it to me without saying it’s in the constitution? Because it is…and isn’t paid. So is the plan to never pay and try to show we are so deadbeats that the Federal government or we try to fight in the supreme court to get out of it?
- Norseman - Wednesday, May 11, 16 @ 11:13 am:
I believe the move to Medicare Advantage was initiated by the Quinn administration.
- RNUG - Wednesday, May 11, 16 @ 11:15 am:
-Norseman-,
You may be right.
- illinifan - Wednesday, May 11, 16 @ 11:28 am:
The 2016 rates for UHC PPO/MA plan shows full price for the coverage is $240 a month. If an employee has 20 years this means the state pays the $240 a month. This is about half the cost to the state from what they would pay for a person on Medicare and in the QCHP (that shows as a $408 month payment).
- RNUG - Wednesday, May 11, 16 @ 11:29 am:
== Educate me… If everyone in America goes on Medicare at age 65, how much does the state pay for those retirees? It certainly has to be less than for state employees. Curious minds want to know. ==
Prior to the push over to MA, the State was paying for normal group health insurance coverage that served as a supplemental policy to Medicare, ie, a Medigap type policy but charged at the full rate. That is where the prescription credible coverage comes from. In a lot of cases, retirees opted for the State’s self-funded Quality Care program because it was the only one with complete out of state coverage. When you had that combination, there were almost no co-pays and very few deductibles. Whatever savings the State achieved came primarily from only having to pay for what Medicare didn’t cover or, if partially covered, just the remainder at the Medicare reimbursement rate.
By moving to a MA plan, the State doesn’t have to pay much, relatively speaking. Just for the benefits that a MA plan doesn’t cover or only partially cover. I don’t know the exact dollar amount but I suspect the State is paying only a fraction of what they were before. The retiree is now having to deal with co-pays and large deductibles they didn’t have before.
- thoughts matter - Wednesday, May 11, 16 @ 11:38 am:
When you go from paying bills on time to 9 months behind,and then to 18 months behind, the result will be that the amount of the bills yet to be paid will increase.
- Anonymous - Wednesday, May 11, 16 @ 11:39 am:
So, it wasn’t Rauner who forced MA on to retirees, it was Quinn.
Right?
- Unpaid - Wednesday, May 11, 16 @ 11:44 am:
Besides saying it’s in the constitution, what is the plan for TRS? It’s in there now, and not paid. Is it to let it go forever until the time we ask for a Fed bailout? AG tries to goto SCOTUS? Not paying has worked to the point of no return.
- RNUG - Wednesday, May 11, 16 @ 11:57 am:
== The 2016 rates for UHC PPO/MA plan shows full price for the coverage is $240 a month. If an employee has 20 years this means the state pays the $240 a month. This is about half the cost to the state from what they would pay for a person on Medicare and in the QCHP (that shows as a $408 month payment). ==
The retiree still have to make their regular Medicare payment to the feds.
- RNUG - Wednesday, May 11, 16 @ 11:58 am:
== So, it wasn’t Rauner who forced MA on to retirees, it was Quinn.
Right? ==
As -Norseman- reminded me, yes, Quinn started it.
- Juice - Wednesday, May 11, 16 @ 12:05 pm:
A couple of words of caution on the PEW numbers (as far as I can tell). First, it appears that the 2010 numbers include SEGIP and TRIP but not CIP, but the 2013 numbers include all three. So that’s a 2 billion difference there.
Also GRS did an analysis in 2009 (their first one) and 2011, so the number for 2010 is an estimate, but the increase between those two years is massive, but the liability from 2011 through 2014 did not see significant growth, so my guess is that the 2010 numbers are severely low-balled (either based on assumption changes, or their first go at the numbers was simply off.)
And the 2013 numbers would not yet incorporate the MA requirement. But if you look at 2011 through 2014, instead of 2010 through 2013, the liability is relatively stable, $54.221 bil in 2011 to $53.579 bil in 2014.
- Anonymous - Wednesday, May 11, 16 @ 12:19 pm:
RNUG, Norseman, et. al.: it was indeed implemented under Quinn.
http://www.suaa.org/assets/pdf/2014/SURS.Yellow.pdf
- thunderspirit - Wednesday, May 11, 16 @ 12:19 pm:
Anonymous at 12:19 was me. Arrgh!
- Ghost - Wednesday, May 11, 16 @ 12:21 pm:
so the plan to not fund is going well. i wonder how many years in crisis until they statt talking revenue streams to fund instead of just stealing from the employees. Rauner of course making it worse by not correcting the income tax…. and making more personaly a year by not restoring the tax then his entire gov salary for 4 years….. talk about a conflict of interest.
- Anonymous - Wednesday, May 11, 16 @ 12:47 pm:
So the shot at Rauner was not warranted.
Thanks for clarifying!
- HangingOn - Wednesday, May 11, 16 @ 1:20 pm:
==So the shot at Rauner was not warranted.==
When the man gives us so much material to work with, it’s easy to get confused at times.
And remember, he blames everything on Madigan, even if it’s not warranted. So there ya go…
- RNUG - Wednesday, May 11, 16 @ 1:34 pm:
== So the shot at Rauner was not warranted. ==
Yep. And, unlike the Governor, I own up to it when I get it wrong.
- Anonymous - Wednesday, May 11, 16 @ 1:38 pm:
yet another gift from our freinds at the public unions and the complicit ILRB
- RNUG - Wednesday, May 11, 16 @ 2:06 pm:
== yet another gift from our freinds at the public unions and the complicit ILRB ==
Exactly how do you figure that? Is it because retirees get premium free health insurance?
If that is your assumption, it’s not true. The State offered it, first at 8 years, later changed to 20 years, to encourage long term career / professional employees and to stop the brain drain of losing people after investing lots of training in the staff.
- Oochie77 - Wednesday, May 11, 16 @ 2:18 pm:
Any numbers or information published by Pew Charitable Trusts relating to unions/pensions is suspect. They have partnered with the Arnold Foundation with the stated intention of gutting unions and furthering anti-worker pension measures.
- Anonymous - Wednesday, May 11, 16 @ 2:50 pm:
Wonder how many corporations offer free healthcare for life after 20 years because they are worried about “brain drain?”
- Demoralized - Wednesday, May 11, 16 @ 2:54 pm:
Anonymous:
It’s not free. They still have healthcare costs.
- Demoralized - Wednesday, May 11, 16 @ 2:55 pm:
==Wonder how many corporations ==
Two words. Who. Cares. What is it with this notion that nobody can get more or less than what someone else has. It’s ridiculous.
- Anonymous - Wednesday, May 11, 16 @ 3:56 pm:
What’s not free? If you have 20 years in with the state, is your health insurance provided at no cost? Yes or No?
- Demoralized - Wednesday, May 11, 16 @ 4:34 pm:
No premium. You still have costs. So, no, it’s not free.
- RNUG - Wednesday, May 11, 16 @ 5:00 pm:
== Wonder how many corporations offer free healthcare for life after 20 years because they are worried about “brain drain?” ==
Back when this was first made a benefit, it was fairly common for large corporations to provide premium free health insurance to their retirees, either for life or until Medicare eligibility.
- Queen Esther - Thursday, May 12, 16 @ 10:33 am:
First of all, everyone needs to know that not all state retirees have big fat pensions.
Second, the State insurance plan called Trail Advantage is not based upon the retirees income. If married, it coordinates with Medicare and is then based upon joint income! Also, there is an up charge for the drug coverage that the State also coordinates with Medicare. The retiree gets a nice notice from Medicare about both of these - it is called a bill payable each month. I just got a notice that the drug up charge increased from last month’s amount.
One probably does not care, but the retiree’s income is usually less after retirement. Those approaching 65 should be aware of all of this. Check the State’s website re: insurance. It has last year’s information for retirees. Too busy to update??? Well, I asked that question and was told that the selection period for those turning 65 was not until October, so they did not need the information until then and the site would stay with the information for 2015 until then.
- Anonymous - Thursday, May 12, 16 @ 11:41 am:
Demoralized, what do you mean there are still costs? Do you feel you should pay no premium AND also get all medical charges paid?? Is that what you are saying?