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City won’t abandon retirees on health care, Emanuel says

Updated: December 30, 2012 3:46PM

Mayor Rahm Emanuel said Wednesday he’s not about to walk away and leave thousands of retired city employees without city-subsidized health care, but changes must be made to control skyrocketing health care costs.

Active city employees will see their monthly health insurance premiums rise by $50 unless they participate in a “wellness program” to manage chronic health problems such as obesity, diabetes and high-blood pressure.

That has led to overwhelming levels of participation and what Emanuel has claimed as “north of $100 million” in savings for the city.

Retirees are a more difficult population to control. They are older, more sedentary and more sickly. Their health care bills are higher. Their doctors visits are more frequent.

But, Emanuel said Wednesday they are not immune from cost controls.

“I’m not [gonna walk away]. We’re gonna make sure people have health care. But, there’s a lot of options available to do it and do it in a cost-effective way where the taxpayers are protected as much as the people who are relying on the health care,” he said.

The mayor noted that a court-approved “10-year settlement agreement” that calls for the city to share costs with retirees is due to expire on June 30, 2013.

“Earlier this year, I asked the city comptroller to set up a blue-ribbon committee to work through the retiree health care, looking ahead to the moment that the court order expires to better manage our retiree health care and to look at all options available of how to do it responsibly, but to get costs under control,” the mayor said.

“What we did at the city budget is the lesson to be drawn as we look to the retirees: How to better manage costs making sure people have health care.”

City pension funds contribute 13 percent to retiree health care. Chicago taxpayers contribute 55 percent and retirees pay 32 percent. While much of the attention has focused on the city’s pension crisis, retiree health care represents an $800 million unfunded liability for Chicago taxpayers.

Asked whether retirees should brace for an increase in health care costs, Emanuel said, “I haven’t gotten the report, so how could I tell you that? ... I can’t make a decision until I get the report.”

But, he added, “Look at what we’ve done at the city. We have better-managed our health care costs while maintaining health care. But, the taxpayers are not paying something that’s growing at 10 percent-a-year because their paychecks are not growing at 10 percent-a-year.”

The Chicago Sun-Times reported this week that thousands of retired city employees are being warned to brace for a costly change to their city-subsidized health care plan — or for no city subsidy at all.

“Each retiree should, therefore, take whatever steps he or she deems prudent to prepare for the possibility that, after June 30, 2013, the city will not provide a health care plan for retirees or, alternatively, that the terms and costs of any future health care plan for retirees may differ significantly,” Jim Mohler, executive director of the Municipal Employees Annuity and Benefit Fund, wrote in a letter to retirees and widowed spouses.

Civic Federation Laurence Msall noted that the city could “walk away” from its health care obligation to retirees because there is “no state constitutional requirement” that the city provide it.

“If they decide to continue it, they have to find a lot of money the city doesn’t have,” Msall said.

“It is very hard to see how current city retirees will not be forced to pay significantly more — if they even have the benefit. In the private sector, those companies that offer retiree health care generally require that retirees pay 100 percent of the premium cost.”

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