Unions find a way to cut costs for city retirees who lost health care subsidy
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Even with a looming, $1 billion spike in pension payments, mayoral candidates Paul Vallas and Garry McCarthy have promised to restore the 55 percent retiree health care subsidy abolished by Mayor Rahm Emanuel.
Trade union leaders are not about to hold their breath.
They’ve formed a non-profit organization with potential to save 7,000 retirees who draw their benefits from the Municipal Employees and Laborers pension funds up to $10 million-a-year.
It’s called the Laborers Benefits Association.
It will offer, both a Medicare plan and a non-Medicare plan as well as a “Part B Waiver Plan” that, in conjunction with Medicare Part B, will allow retirees 65 and over not eligible for Medicare to get full coverage at a monthly cost nearly $1,500 below the city-offered, Blue Cross-Blue Shield plan.
“Next year, the [city] plan is gonna be, on the Medicare side, $99 more –a-month and, on the non-Medicare side, over $500 more-a-month,” said Joe Healey, business manager of Laborers Local 1092.
“By changing to the Aetna plan, these retirees are each gonna save over $1,000-a-year. If they don’t have Medicare, they’re gonna save over $5,000-a-year. That’s money in their pocket…The total savings could be $10 million-a-year.”
Vallas has promised to restore the retiree health care subsidy and make the specific amount the “product of strategic bargaining” with union leaders.
He has argued that there are “multiple pathways for providing a subsidy that will not impose a permanent, long-term funding mandate on the city.”
Those possibilities include diverting “a portion of the salary increase in the next contract” to fund retiree health care and requiring a “small annual contribution from active employees, which could be tied to income,” Vallas has said.
In late September, McCarthy showed up at a jam-packed Daley Center courtroom to show his support for former city employees fighting to restore the 55 percent retiree health care subsidy that Emanuel abolished.
Without offering specifics, McCarthy has promised to find the $130 million a year needed to restore the subsidy for retirees, 10,000 of whom started working for the city prior to April 1, 1986 and, therefore, are not eligible for Medicare.
On Friday, Healy was realistic about the campaign promises.
“I’m anxious to see some of the plans and the funding mechanisms that some of the candidates have indicated would be necessary,” Healy said.
“We plan to continue this [alternative] plan as long as it’s better than any option the city is offering… I’m not optimistic…It’s not just the pension crisis. The city has a lot of financial issues to deal with. We want to make sure retirees don’t fall behind [those] other issues.”
Emanuel not only completed the three-year phase-out of the 55 percent city subsidy.
He threw salt in the wound by bragging about it in an October 2015 private email exchange with venture capitalist Henry Feinberg that took center stage in the ongoing legal battle to restore the program.
“Since when did Rahm Emanuel let a judicial ruling get in his way and not find a creative work-around solution?” Feinberg wrote then.
Emanuel replied, “Never. Which is why I eliminated retiree health care. Only elected official to eliminate-not cut or reform-a benefit. Thank you very much. A $175 million saving!”
The mayor has said he “wasn’t bragging” as much as he was “acknowledging how we stabilized” skyrocketing health care costs.
The plaintiffs’ attorney Clint Krislov didn’t buy the mayor’s argument. He filed a legal brief in the marathon case that branded Emanuel’s email “boasting” and “Trump-like.”