October 13, 2009
As part of his efforts to rein in the State of Illinois budget, Governor Pat Quinn is requiring all state retirees to contribute to the costs of their dental insurance as of October 1, 2009.
Previously, the State’s contribution for retiree dental premiums ranged from 45% 40%* for retirees with eight years of service up to 100% for those with 20 years or more. Now, all retirees are charged the same monthly premium as active workers--$11 for one retiree, $17 for one retiree and one dependent and $19.50 for one retiree plus two or more dependents. This amount represents about a third of the state’s cost for providing dental insurance, with the State paying the rest of the bill, according to state officials.
The change is expected to save about $12 million a year. Because the plan was introduced three months after the start of FY2010 on July 1, 2009, the State will see approximately $10.4 million in savings during the current fiscal year. Most of those savings are expected to come from the increased premiums. The State will also spend less on dental bills because 5% of the 76,000 state retirees decided to drop dental insurance following the introduction of the new policy. In FY2009, the State paid $27.6 million on dental coverage for retirees and an additional $10.6 million for their dependents.
The new dental insurance policy is a far less sweeping change in state health insurance than that originally proposed by Governor Quinn on March 18, 2009 in his FY2010 budget plan. The Governor had proposed an increase in basic health insurance premiums for employees and retirees who were covered by the State’s traditional indemnity plan, which allows participants to choose any doctor or hospital. The Governor’s proposal was expected to save the State $200 million a year. Unlike the new dental insurance policy, the change in retiree contributions for basic health insurance coverage would have required an amendment to the State Employee Group Insurance Act. Governor Quinn’s proposal sparked strong opposition from Local 31 of the American Federation of State, County, and Municipal Employees (AFSCME), which represents state workers, and fell by the wayside during budget negotiations last spring.
Local 31 is also fighting the dental insurance plan and has filed a grievance that is scheduled to be heard by an arbitrator on November 4. The union maintains that the State should have negotiated with Local 31 before implementing the premium increase. Local 31 said it views the change as a threat to its members’ retirement security. The Illinois State Employees Association Retirees has also opposed the change in dental coverage.
The Civic Federation has repeatedly recommended that the State curb employee health expenses. A Federation report in April 2007 found three major aspects of the State’s health insurance program that far exceed what such programs cost both in the private sector and other state governments and said Illinois could save hundreds of millions of dollars a year by changing its plan. The report specifically pointed to the State’s policy of paying 100% of the premiums for retirees with 20 years or more of service and said that over 92% of the then 69,906 retirees paid no premiums for the coverage. Illinois was one of only 15 states that did not charge at least some of their retired workers over 65 with Medicare coverage for health insurance. The Federation also praised Governor Quinn’s FY2010 budget proposal to increase employee health insurance contributions.
*Updated to correct a calculation error.