Illinois Radio Network
SPRINGFIELD – Every Illinois household would have to pay $11,000 to cover the cost of taxpayer-subsidized healthcare benefits for retired state workers, a figure that is expected to grow, according to a new report from public finance watchdog Wirepoints.
Illinois has more than $137 billion of unfunded pension liabilities for retired state employees. That is up more than $3.5 billion from the year before, according to the Illinois Commission on Government Forecasting and Accountability. That doesn’t include healthcare costs. Some employees who work 20 years for state government get healthcare coverage with no copays.
Wirepoints President Ted Dabrowski said numbers from state actuaries show the state provides 567,000 public sector workers and retirees subsidized health insurance benefits. Those getting fully subsidized benefits could cost $200,000 to $500,000 per retiree.
To cover the expected $68 billion in healthcare liabilities would cost each household thousands of dollars.
“[It is] $11,000 per household, when you divvy up the debt between households, so that piles up on top of the pension debt that we have,” Dabrowski said.
The liabilities, he said, are only going to increase because the state government is only paying bills that come due and not setting aside money for future costs.
“Right now, the claims are about $1.3 billion a year that the state taxpayers are funding and that number will grow close to $6 billion by 2040,” he said.
Just in 12 years, Dabrowski said taxpayers’ costs for fully subsidized healthcare grew 40 percent.
Dabrowski said the growing costs squeeze out taxpayer dollars for other things such as roads and social service programs.
He also noted a 2011 study by Mercer that found free retiree health insurance was uncommon among public sector employers and almost unheard of in the private sector. That study found, on average, state and local governments across the country pay about half of their retirees’ health premiums.
Some state lawmakers have suggested the way to solve the underfunding is to increase taxes. Dabrowski said that’s not the answer for Illinois.
“There’s more debt than can ever be repaid with taxes,” he said. “If we keep raising taxes to pay this debt down, people are just going to keep leaving. They already are leaving, but if we start raising the taxes to truly pay down this debt we’ll have fewer and fewer people, the debts aren’t going away, and that means the burden on those who remain will be larger. So we’re kind of on a death spiral here.”
He suggested a constitutional amendment to reduce benefits for retirees moving forward.
State Rep. Joe Sosnowski, R-Rockford, said he plans to file a constitutional amendment to address the fully subsidized state retiree healthcare costs. Such efforts are unlikely to advance at the statehouse, where Democrats hold veto-proof majorities in both legislative chambers.
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