Wirepoints’ Ted Dabrowski and John Klingner explain reality:
Illinoisans will want to pay attention to how Ohio recently responded to its state retirement debt crisis. There, the Ohio Public Employees Retirement System board (OPERS) voted to cut health-care benefits for its 500,000-plus members to ensure its retirement funds don’t collapse.
In Illinois, that’s not even an option due to the Illinois Supreme Court Kanerva decision that says retiree health is protected pension benefit. All reforms are blocked in a state where workers get free retiree health insurance after just 20 years of work. Illinois has amassed $68 billion in unfunded health benefits owed to state workers, teachers and college employees. That’s on top of Illinois’ official $137 billion pension shortfall.
In contrast to Illinois, Ohio voted for reform to make sure the state keeps its pension system funded.
According to the executive director of the fund, there simply isn’t enough money to pay for both pension and retiree healthcare benefits. “The basic problem is we have no money to fund health care,” OPERS Executive Director Karen Carraher said.
From the Columbus Dispatch:
The monthly allowance paid to retirees who are Medicare eligible will drop from between $225 and $405 per month to a range of $178 to $315 per month…
…The other major change was to eliminate the health care plan for retirees who aren’t Medicare eligible. Instead of paying 51% to 90% of their premiums, OPERS plans to give these retirees money to go buy insurance on the individual market.
These hits will be bigger. “Low service employees” will lose $329 per month on average, and everyone on the plan could see higher deductibles. The market average is about $1,100 more than what OPERS’ offers now.
In addition, Ohio will pour the state money that’s been going annually towards retiree healthcare into its pension fund instead. According to the state’s analysts, the health system has 11 years worth of funding stored up before it runs dry.
Read more: Wirepoints