FILE - Hospital in Illinois
Highland Park Hospital in Highland Park, Illinois
Photo courtesy of the NorthShore University HealthSystem
The amount of a state employee's health care that is paid for by taxpayers is notably higher in Illinois than the national average, and one health insurance expert warns it may take the state practically going bankrupt before there’s real change to bring taxpayers' cost down.
Gov. Bruce Rauner said last week during his budget address the state has to change how it manages group health expenses for state employees. If not, he said the state’s finances will continue to deteriorate.
“Today, we pay almost 90 percent of the premiums for government employee health insurance policies that are way more expensive than plans in the private sector,” Rauner said. “Taxpayers shouldn't have to pay for government health insurance policies that are richer than the ones they can afford for themselves. That’s not fair.”
Rauner wants to bring that down to a 60/40 split, something he said could save taxpayers $470 million.
Northbrook-based Castle Group Health President Mark Gurda doesn’t expect that to happen. He said Rauner’s proposal could just be a bargaining chip.
“While I’m all for the state getting their budget in order, I’m not sure that this isn’t a negotiating position to get to 70 or 75 [percent],” Gurda said.
The Kaiser Family Foundation put the national average health insurance split at about 70/30 in 2017.
Rauner’s plan would not just try to address the taxpayer cost of state employee healthcare to find $470 million in savings, he also wants to shift the cost of university employees health insurance to the schools for savings of $105 million. He also wants to end health subsidies provided to retired teachers and community college employees for $129 million in taxpayer savings.
Gurda doesn’t expect Rauner to get what he wants. He doesn’t expect the status quo to change at all until a near fiscal catastrophe.
“Then and only then, when there are consequences of no action, will there be something proactive,” Gurda said.
As of the end of the 2017 calendar year, there was a backlog of the taxpayers’ portion of state employee health insurance of more than $1.4 billion, according to the Illinois Commission on Government Forecasting and Accountability. The late interest penalties on that are nearly $430 million.
The backlog is down from $5.1 billion in September of last year, but only because the state went more than $6 billion in debt with bonds to pay down backlogged bills. Nearly $4 billion of that was for the backlogged health bills.
COGFA says the state has a chronic problem of not properly funding state employees', retired teachers', community college employees' or local government officials' health plans.
COGFA pinned the underfunding on a combination of medical cost inflation, insufficient appropriations, and rising interest payments. The two avenues for solutions, COGFA said, are reducing spending and/or increasing revenues, which includes increasing contributions from public sector employees or finding extra money elsewhere in the budget.