Illinois Supreme Court backs retirees on health benefits

Ruling could threaten state’s pension overhaul plan

Chicago – The Illinois Supreme Court has sided with retired state employees that health insurance coverage is a constitutionally protected retirement benefit, a ruling that could portend trouble for the state’s landmark pension overhaul approved last year.

The court’s 6-1 ruling reverses a lower court decision that effectively allowed the state government to require retirees to pay for a portion of their own health care. The justices sent the case back to the lower court, where retirees can proceed with their challenge.

Justice Charles Freeman, writing for the majority, said the “plain and ordinary meaning” of language in the constitution supports the conclusion that health insurance premium subsidies are part of a contractual relationship with retirees that can’t be diminished.

The ruling could reflect trouble ahead for that state’s pension overhaul, which also faces a constitutional challenge.

PENSION OVERHAUL

The pension overhaul law would affect state workers and office holders as well as university employees.

The Illinois constitution states public employee pensions are a legal, contractual relationship and that the agreed-upon benefits are not to be “diminished or impaired.”

But the state government for decades failed to make sufficient payments into the pension fund and now finds itself with a $100 billion liability.

The new law would make reductions in the 3 percent annual COLA, raise the retirement age and reduce the amount of salary upon which the pensions are based.

Unions opposed to the law – Illinois AFL-CIO, the American Federation of State, County and Municipal Employees, the Service Employees International Union, the Illinois Federation of Teachers, the Illinois Education Association and other public unions – say it amounts to “theft” from state workers who paid into the system.

CONSTITUTION ‘MEANS WHAT IT SAYS’

Henry Bayer, Executive Director of the American Federation of State, County and Municipal Employees (AFSCME) Council 31 said the health care ruling means state workers “can count on the Illinois Constitution to mean what it says.”

“Retirement security, including affordable health care and a modest pension, cannot be revoked by politicians,” Bayer said.

(Some information for this story from the Associated Press.)