Emanuel socks city retirees with 40 percent health insurance hike

Mayor Rahm Emanuel on Friday dropped another financial bombshell on Chicago’s 25,000 retired city workers and their dependents: their monthly health insurance premiums will be going up by a whopping 40 percent — in spite of a pending lawsuit and a precedent-setting Illinois Supreme Court ruling.

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.

On Friday, city retirees and their dependents got hit again — only this time, even harder. The city notified them of a 30-percent to 40-percent increase that will cost most of the retirees between another $300 to $400 a month.

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 full-speed ahead with his phase-out of the 55 percent city subsidy, in spite of a July court ruling that could tip the scales against the city.

The Illinois Supreme 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.”

City retirees have a similar lawsuit pending that Krislov expects to result in a similar outcome.

That’s why he’s surprised that Emanuel is going full steam ahead.

“Restraint might have been called for until the case is over, but restraint doesn’t seem to be the plan here. The plan is to wean retirees off the city subsidy and have them off entirely by Jan. 1, 2017,” Krislov said late Friday.

“We were planning to go in next week to ask the court to roll back the rate to 2013 levels [before the first round of subsidy cuts]. This huge increase — which is quite breath-taking increase, considering where health care costs are now — gives us even more reason for doing that. … We hope the court will rule accordingly and finally resolve this issue so the city’s retirees know that their benefits are as they rightfully anticipated.”

Krislov noted that the new premiums were not subject to the “audit and reconciliation process” required under a now-expired, court-approved settlement.

Virtually every year, that process uncovered overcharges based on projections that turned out to be far beyond actual expenditures, he said.

In an e-mailed statement, Budget and Management spokesman Carl Gutierrez called the increase “part of our efforts to right the cIty’s financial ship” and save Chicago taxpayers $27 million in 2015.

“For pre-Medicare retirees, there will be an additional reduction in their subsidy by only 25 percent and the city is offering four plans to provide them with options for healthcare and to reduce their costs, including an option that would reduce their premiums,” he wrote.

Emanuel has already ruled out a pre-election increase in sales or property taxes. He has also postponed the day of reckoning on a state-mandated,$550 million contribution to shore up police and fire pension funds that have assets to cover just 30 percent and 24 percent of their respective liabilities.

If city employees win their case — just as their state counterparts did — the mayor will face intense pressure to raise taxes in an election year.

The increases in monthly health premiums announced Friday range wildly — between 7 percent and 79 percent. The average is in the 30-percent to 40-percent range.