The city had 19,389 retirees eligible for health, life- insurance and death benefits as of June 30, 2011, according to Orr’s plan. The insurance benefits cost the city $177.4 million in fiscal 2012. Retirees contributed an additional $23.5 million.
Start Saving
Orr wants to give current and former workers health- reimbursement accounts. The city would pay from $100 to $250 a month to help with medical costs or premiums under the Patient Protection and Affordable Care Act, according to a proposal to city unions.
That would cost the city as little as $27.5 million annually, according to Orr’s plan.
Chicago plans to phase out retiree health coverage by the beginning of 2017, according to a May 15 letter from Comptroller Amer Ahmad.
The city projects that health-care spending would increase to $540.7 million in 2023 from $108.8 million in 2012 without changes, according to a Retiree Healthcare Benefits Commission report in January.
Having exchanges means that “eliminating healthcare benefits for early retirees is likely significantly less onerous on those retirees,” according to the report.
Balancing Commitments
“The retirement health-care system as it stands today is fiscally unsustainable, and we have a responsibility to ensure a secure financial path for Chicago taxpayers,” said Kathleen Strand, a spokeswoman for Mayor Rahm Emanuel. “The mayor also wants to ensure our retirees, who served this city honorably, have access to health care.”
Unions oppose simply shifting retirees into exchanges because insurance will cost more and provide worse coverage, said Steven Kreisberg, director of collective bargaining and health-care policy for the 1.6 million-member American Federation of State, County and Municipal Employees in Washington. Besides, he said, health care was part of the government commitment to employees.