Simply put, this piece of Illinois healthcare news doesn’t look good for the state’s teachers or its residents.
Every adult in Illinois is on the hook for $4,000 in retired teacher healthcare costs, according to a Bellwether Education Partners study, released on Tuesday, September 18, 2018.
The state owes $54 billion in future health care costs, ranking as the sixth most in-debt place out of all states based on the adult population. “For too long, employers were able to promote the benefits without recognizing their long-term costs,” said Chad Aldeman, principal at Bellwether. “That reckoning is coming, and there are better and worse ways to tackle it.”
For public school teachers nearing retirement, pensions and healthcare benefits represent a huge financial safety net. Large pay discrepancies between the public school sector and the private make it difficult for these teachers to build a rainy-day fund.
Aldeman offered a handful of solutions for managing the growing bills from healthcare. In one scenario, the state could rescind coverage of retirees making more than a certain amount. “The state is providing retiree benefits even to a retired superintendent who’s making $150,000 or $200,000 a year in a pension and they get free healthcare on top of that,” Aldeman said. “That may not be a good use of public dollars.”
What’s more, with health insurance plans costs in the U.S. skyrocketing, the problem is only going to get worse. By 2026, health spending is projected to reach $5.7 trillion.
A doable solution would be eliminating the benefits altogether. North Carolina, for instance, recently announced it would not offer retiree health benefits to state workers hired after January 2021. With no source of income, many former teachers could qualify for Obamacare subsidies that offset the cost of their monthly insurance premiums.
As worrisome as it is, the new report should serve as a wake-up call for policymakers and local school districts to work on developing a new, more affordable health insurance system for current and future retirees.
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