Severe cuts to services, raising taxes significantly or amending our IL Constitution might be our only options for fixing Illinois' financial crisis after the Illinois Supreme Court ruled on July 3 that health insurance premiums are a benefit that is protected by the Illinois Constitution. It is a devastating blow to the State, which was relying on retiree contributions to their health care costs as a means for helping shore up the massively-underfunded state pension systems.
The 6-1 ruling relates to a legal challenge that stemmed from the 2012 health care reform bill passed in the General Assembly and signed into law by Governor Pat Quinn. The reform bill included a provision that allowed the state to collect a portion of the cost of premiums from retirees for their state-subsidized health care. Prior to the approval of the 2012 pension reform legislation, retired state workers with 20 or more years of service were entitled to receive free health insurance.
In the majority opinion, written by Justice Charles Freeman, the court held that the constitution supports the conclusion that health insurance premium subsidies are part of a contractual relationship with retirees that cannot be diminished:
"We conclude that the state's provision of health insurance premium subsidies for retirees is a benefit of membership in a pension or retirement system within the meaning (of the Constitution) and therefore the General Assembly was precluded from diminishing or impairing that benefit."
Many believe Thursday's ruling sets the stage for the recently passed pension reform bill, SB01, to be found unconstitutional. While I fully respect the court's decision, I was admittedly surprised by the justices' expansive interpretation of the constitutional language as it relates to health care and how it will likely relate to our pension reform bill.
With this ruling guiding future decisions, I believe the ultimate ramifications will be nothing short of financially devastating for the State and for municipalities that also must provide for employee pensions.
Rep. Sandack is a state representative and former mayor of Downers Grove, IL. The above opinion editorial was distributed in Rep. Sandack's weekly newsletter.