As you may know, our healthcare plans are administered through the Central Management Services (CMS) plan, which are negotiated between the Governor’s office and AFSCME. The governor has proposed drastic cuts to coverage and services while dramatically increasing costs to our current healthcare plan. If his plan succeeds, University employees will pay $3,100 more per year on average for lesser coverage. To ensure that this draconian plan fails, University of Illinois faculty, staff, and their unions, along with President Killeen, must present a unified front against it. The University system will be presenting the potential impacts for University faculty next week.
What Does Rauner’s Plan Mean for University Employees?
The CMS plan is the only one available to university faculty and staff. The only alternative to the CMS plan is to opt out entirely and use one’s spouse’s plan. The amount of coverage varies by plan, but on average, participants currently cover about 15-20% of their plan costs (premiums and out-of-pocket costs) while the state picks up the other 80-85%.
Under Rauner’s proposal, University employees will pay 40% of the total cost starting as early as January of 2017. This figure is well above the current employee contribution average in most other states. The Kaiser Family Foundation’s 2014 survey of employer health benefits found that an average worker contributed 18% of insurance costs for single coverage. The figure climbed to 29% for family coverage. The study found that the range was 13-14% for large public employers. No plan is as poor as the one proposed by Governor Rauner.
Although U of I employee unions can bargain salaries and working conditions, the State Employees Group Insurance Act of 1971 does not allow unions to bargain healthcare plans representing an alternative to the insurance plan administered through the state of Illinois’ department of Central Management Services (CMS). U of I insurance is negotiated with only one union, The American Federation of State and Municipal Employees (AFSCME). In order to save $700 million, Governor Rauner wants State employees to pay higher premiums for less care. The Governor’s current negotiations with AFSMCE are very antagonistic. Indeed, there is a distinct possibility that all participants in the plan may suffer as the Governor continues to push his “Turn Around” agenda, the main purpose of which is to weaken unions.
What Are the Ramifications of the Governor’s Proposal?
At the bargaining table, Governor Rauner is pushing for two radical changes to the group insurance benefit which could increase employee costs by thousands of dollars each year. First, he is proposing to drastically increase the share of the premium paid by employees and drastically increase the out-of-pocket costs when employees access healthcare. Second, Governor Rauner wants to double the employee premium contribution of 40% of the cost for single and dependent coverage. This proposal represents a significant change in a number of ways:
1. The current proposal is for Employee Premiums to double as early as July 2016. Deductible and out-of-pocket expenses will increase as well. On average, this will cost employees $3,100 per year.
2. Currently employees pay a fixed dollar amount toward premiums as specified in their contract. A move to paying a percentage of the premium cost would cause employee costs to rise each year based on any increase in the state’s healthcare costs.
3. Currently employees who make less pay a little less for health insurance and employees who make more pay a little more. This proposal eliminates protections for lower paid workers because everyone will be paying the same amount for group insurance.
Increasing the employee premium contribution for 19% (the current average contribution) to 40% puts Illinois outside the norm of other states. The national average for state employee premium contributions is 16%.
These proposed changes to health benefits would move Illinois from average to dead last when compared to other states. No other state has an employee health insurance plan with an actuarial value anywhere near as low as what the Governor has proposed. When combined with the “Tier II” pension for new employees, the University of Illinois system will have significant recruitment and retention issues. In short, the institutions in this system will have one of the worst pension and healthcare benefit packages of any public university system in the country. To add insult to injury, if the proposal succeeds, it would represent a significant salary cut for current employees—thereby retroactively and without employees’ consent changing the terms of their contracts.
What Actions Have Been Taken?
The Faculty Senates of UIC and UIUC have written to President Killeen expressing their concerns over the Governor’s healthcare proposal and requesting meetings with him. President Killeen has responded to these letters thanking the Senators for their concerns and ensuring them that he shares them and is closely monitoring the situation. In addition, President Killeen has convened the Employee Group Benefits Task Force with faculty and staff members from all three campuses. This task force has been asked to examine the proposed changes and proactively inform employees. To that end, the task force has scheduled a series of campus meetings to provide information and begin a discussion. The meetings will begin with a short presentation on the state’s proposed changes to the benefit plans and costs and the impact on employees, followed by an open session for questions and input from attendees.
Campus meetings have been held in Chicago and Urbana last week. The meeting at UIS will be as follows:
Date: Thursday, July 14, 2016
Time: 2:00 – 3:30 pm
Location: Brookens Auditorium, One University Plaza