Emanuel defends 40-percent hike in city retiree health premiums

Mayor Rahm Emanuel on Tuesday defended his decision to save $27 million in 2015 by raising monthly health-insurance premiums by an average of 40 percent for 25,000 city retirees — even after a precedent-setting Illinois Supreme Court ruling that could tip the scales against the city.

“I said early on that we were gonna make the hard decisions which brought our structural deficit down by half, so that we can make critical investments, which is what we’re doing today,” Emanuel said after unveiling a plan to end homelessness among veterans by 2015.

“If we’re willing to make the hard decisions — not defer them, not deny them and not delay them but make the tough decisions — we’ll be able to actually then start to make some of the investments that we have, for a long period of time, put off. This is one of those examples. The other is … to make sure that every 4-year-old who lives at poverty will have pre-K education because it will complement the universal kindergarten we also did.”

But what about the Illinois Supreme Court ruling in July that could signal defeat in a similar case filed by city retirees?

The state’s highest court ruled then that subsidized health care premiums for state employees are protected under the Illinois Constitution and that the General Assembly was “precluded from diminishing or impairing” that benefit.

“The case that you’re talking about is down in Springfield. It doesn’t reflect or impact the case that’s in the federal court for the city of Chicago, the Korshak class [composed of the city’s oldest retirees]. That’s totally different,” the mayor said.

Chicago Teachers Union President Karen Lewis, mulling a race for mayor against Emanuel, strongly disagreed.

“It’s unconstitutional. If it’s unconstitutional for state workers, why wouldn’t it be unconstitutional for city workers?” Lewis said.

“It’s basically the same tone-deafness we continue to see with this guy. It’s an outrage. Why not go after our seniors [living on fixed incomes]?” she asked facetiously. “You don’t have any other way?”

Mayoral challenger Bob Fioretti has accused Emanuel of pushing 25,000 retired city workers “closer to poverty” by raising monthly premiums by an average of 40 percent.

Asked where he would find the $27 million that Emanuel hopes to save in the city’s 2015 budget by continuing to phase out the city subsidy, Fioretti talked about “complete reform” of tax-increment financing (TIF) districts and about his plan to impose a 1 percent commuter tax on 620,000 suburbanites who work in the city.

Last year, Emanuel announced plans to save $108.7 million a year by phasing out the city’s 55 percent subsidy for retiree health care and forcing retirees to make the switch to Obamacare.

For the city, the Year One savings was $25 million. For retirees, that translated into an increase in monthly health insurance premiums in the 20 percent and 30 percent range.

Late last week, Chicago’s retired city workers and their dependents got hit again, even harder.

The Emanuel administration notified them of another 25 percent reduction in the city subsidy for retiree health care that will trigger an average $400-a-month increase in premiums.

The increase stunned Clinton Krislov, an attorney representing retirees in a marathon legal battle against the city, and not only because health care costs appear to be “flattening,” as he put it.

What’s even more surprising is the fact that Emanuel is forging ahead with his phase-out of the city subsidy in spite of the July Supreme Court ruling in the state case.

On Tuesday, Emanuel noted that the news is not all bad for retirees.

“We kept in and invested in strong benefits like prescriptions drug coverage that will continue. [There are also] more options in health coverage, so you can actually see a lowering of your premiums. [And the city is] making sure that our oldest retirees have no changes at all,” the mayor said.

A top mayoral aide stressed that only 25 percent of any increase would be caused by the reduction in subsidies and that some retirees may actually see the monthly payments go down. City Hall won’t know for sure until retirees in scores of different categories make their final decisions from a host of options.

Separately, mayoral spokesperson Libby Langsdorf wrote in an email to the Sun-Times: “A $400 increase is as likely as a decrease of $400. You cannot calculate an average monthly cost for retirees until you know what plans people will opt for,” mayoral spokesperson Libby Langsdorf wrote in an email to the Sun- Times.

“Under the structure the city has provided, there are options that allow people to have no increase or a decrease in their costs.”

As for the legal question, Langsdorf wrote, “The city’s reform of retiree health care plans is on solid constitutional ground. The ruling earlier this year on state retiree issues is not relevant.

Unlike the state’s health care commitments, the city never promised its retirees lifetime medical benefits.”