CHICAGO - A commission chaired by the City of Chicago's Comptroller issued a report earlier this week which said that Chicago can no longer afford its subsidies for government worker retiree health care, which currently cost the city $109 million annually but would grow to nearly $500 million in a decade thanks to projected increases in the number of retirees and in health care costs. The commission offered Mayor Rahm Emanuel a series of suggestions on how to change the program to save money, including having workers pay a greater percentage of their own health care premiums in retirement, but it also concluded that the city might want to simply end the subsidy program, a move which almost certainly would be challenged in court.
The city's current program for providing benefits to workers in retirement is part of a deal that ends this year, which some believe gives Chicago the ability to modify or simply end the program.
However, the Illinois constitution also provides protections against diminishing government-worker retirement benefits. While the city's unions claim that those protections extend to health insurance subsidies, others say that the health insurance subsidy is not protected by the constitution.
Right now Chicago provides a subsidy to workers depending on when they retired, up to 55 percent of health insurance premiums for those who retired before 2005. The city and its pension system share the burden. The city is essentially paying for its share of the benefit out of its annual budget on a pay-as-you-go basis because it has not set aside funds for the insurance premiums.
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