Retired city of Chicago employees are pushing back against Mayor Rahm Emanuel's
plan to phase out their 55 percent health care subsidy by 2017. After the phaseout, the city plans to cover the workers using plans under the Affordable Care Act.
Chicago Sun-Times' Fran Spielman reports that retirees recently
filed a class action lawsuit in circuit court against the city and its
employee pension funds. The suit charges that diminishing and impairing city pension benefits violates the state's constitution.
Additionally, the lawsuit says the retired workers have "a property right to a lifetime health care plan" from the city, and a “depreciation of property rights” would go against the U.S Constitution's 14th Amendment.
the mayor's plan, 5,500 of the city's oldest retires who retired
before August 23, 1989 would continue to receive the health care subsidy
for the rest of their lives. The other 30,000 retires would have to
look for coverage under the Affordable Care Act. The move is expected to
save taxpayers $108.7 million a year, according to the city.
The mayor extended the 55 percent subsidy to January 1, but after that it would be phased out over a three-year period under the plan.
attorney representing the plaintiffs, Clinton Krislov, said the city retirees should be able to keep their current benefits for five years to
see how the Affordable Care Act plays out. The suit would not have been filed, he said, if Emanuel's administration took that advice.
The city maintains that continuing to provide the retiree health benefits could negatively impact the city's credit. Last week, Moody’s dropped the city's bond rating by three levels due to its ballooning pension costs as well as “unrelenting public safety demands.”
The city released the following statement in response to the suit, reported the Chicago Sun-Times:
the City of Chicago is confident in our legal position, we are
committed to developing a plan that is respectful of both retirees and
taxpayers. The evolving landscape of healthcare combined with the City’s
unsustainable healthcare costs reinforces the necessity of these
changes. As the Moody’s action last week illustrated, the City must
address its short- and long-term financial challenges both in its
operating budget and retiree benefits. As someone who has fought to
protect and expand access to healthcare throughout his career, Mayor
Emanuel is committed to a deliberative process that will ensure all our
retirees have access to high-quality health care.