Chicago’s 28,000 retired city workers and their dependents are asking a federal appeals court to block Mayor Rahm Emanuel’s plan to save $27 million in 2015 by raising monthly health insurance premiums by anywhere from 30 percent to 79 percent.
Arguing that the Illinois Supreme Court’s decision to preserve health benefits for state retirees “substantially increased” their chances of prevailing on the merits, retirees want to compel the city to roll back monthly payments to 2013 levels.
That’s when 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.
If the Seventh Circuit U.S. Court of Appeals grants the preliminary injunction, retirees will save anywhere from $50 to $800 a month. The city stands to lose $52 million.
In July, the Illinois Supreme Court ruled that subsidized health care premiums for state employees are protected under the state Constitution and that the Illinois General Assembly was “precluded from diminishing or impairing” that benefit.
The Emanuel administration has dismissed the ruling as irrelevant, arguing that, unlike the state, the city “never promised its retirees lifetime medical benefits.”
Clinton Krislov, an attorney representing retirees in the marathon case, doesn’t buy that argument.
“The city is throwing hardballs at a time when the Illinois Supreme Court is making it clear that retiree health care benefits are protected. The city is determined to thumb their nose at the Illinois Supreme Court decision and fight this to the death,” Krislov said.
“Our likelihood of prevailing has substantially increased. That means that, during the course of this case, the rates should be restored to what they were when we filed our complaints in the fall of 2013.”
Carl Gutierrez, a spokesperson for the city’s Office of Budget and Management, said the city is forging ahead with year two of a three-year phase-out of health benefits for post-1989 retirees.
“Those who retired on or after August 23, 1989 will see a subsidy reduction of 25 percent in 2015,” Gutierrez wrote in an email.
“For retirees who are not eligible for Medicare, 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. The changes for the City’s retiree healthcare plan will save taxpayers an estimated $27 million in 2015.”
Gutierrez noted that retirees filed a similar motion in an attempt to block last year’s increase, and it was denied.
Emanuel maintained last week that he has given retirees options to not only avoid the increase but also reduce their monthly premiums.
But Krislov noted that the deadline for making that choice is Oct. 3. Retirees who choose another plan will face dramatically higher out-of-pocket costs — up to $6,000-a-year, instead of $1,200 — and a narrower network of doctors, he said.
They’ll also be precluded from returning to the old plan unless they can show “proof of insurability.”
If the retirees’ motion is granted, the city would be forced to let “any formerly covered person who left for any reason after the 2014 rate hike” to re-join the city program.
“What the city is really trying to do here is force retirees financially to select an inferior plan and block them from coming back,” Krislov said.
“If you have a condition develop [in the interim], they won’t let you back in. That’s pretty aggressive. It’s heavy-handed.”
Emanuel has already ruled out a pre-election increase in sales or property taxes. If city employees win their case — as their state counterparts did — the mayor will face intense pressure to raise taxes or make dramatic service cuts in the 2015 budget that will serve as the platform for his re-election bid.
