-By Hugh. Hugh is a frequent and informed writer of comments to this blog.
I really knew very little about the Teachers Health Insurance Program before reading about what happened to retired city workers on Fred’s blog. I decided to take a look at The State Employees Group Insurance Act of 1971 (as amended in 1995) Interesting reading.
Reflecting back on what I read, as well as what thought I knew about retiree insurance benefits, here are some short takes. They could mean something or nothing. I’m no expert.
First: Fred is absolutely right. Retiree health insurance was never intended to be a “pension” benefit when it was created. It is right in the law. How Kanerva might affect that is unclear as far as teachers are concerned.
The law was intended to create an ongoing subsidized benefit of health care insurance for retired teachers (among several other things). Unlike most other insurance programs that this law provides, most of the cost for retired teacher health insurance is paid by active teachers and retirees (75% or so) with the state contribution capped at 24%.
The subsidy is paid out of a special fund (similar to the T.R.S. Pension fund), not out of the state treasury. The state, active teachers, and retirees all contribute to the fund. The fund pays the subsidies.
I believe (but do not know for sure) that there is a continuing resolution for this contribution to T.H.I.S. The Governor or the General Assembly may or may not put that contribution in the budget, but unlike with other state insurance, they cannot claim the money was not appropriated.
That seems to be one big difference from the situation with A.S.F.C.M.E.’s insurance subsidies, administered by a government entity and paid for out of the treasury.
No termination dates are listed in the law. The benefit for teachers looks to be an individual retiree’s property. This is different than retiree benefits negotiated by unions as a group for their members. That is a big part of the issue with city workers.
I suspect part of the the reason why Governor Rauner and company backed off on their attempt to not budget teacher health insurance subsidies was because it would cost more to end them than to keep them. More in dollars, litigation and public relations.
The benefit is mostly paid for by teachers and retirees. not the state. It has it’s own trust fund. The legislative intent was clearly stated in the law. There could be problems with the contracts clause of both the federal and state Constitutions, Kanerva notwithstanding. Lots of possible problems to eliminate a program now doing what the Governor claims to want A.F.C.S.M.E. to do.
Watchful waiting seems to be in order for teacher retirees, as well as support for our colleagues who’s benefits are now under attack. If we have learned anything about dealing with politicians is that they will look for any crack to take what is ours. Harm to one is harm to all. Be vigilant.