Retired city workers file suit to save health-care subsidy
BY FRAN SPIELMAN City Hall Reporter email@example.com July 25, 2013 7:22PM
Retired Chicago Police Officer Mike Underwood, the lead plaintiff in the city retirees' lawsuit over health-care subsidies, holds photos of two police stations where he served. | Stacia Timonere~For Sun Times Media
Updated: August 27, 2013 6:29AM
Chicago’s 30,000 retired city employees are trying to stop Mayor Rahm Emanuel from saving $108.7 million — by phasing out the city’s 55 percent subsidy for retiree health care and foisting Obamacare on them.
One week after an unprecedented, triple-drop in Chicago’s bond rating, retirees have filed a class-action lawsuit against the city and its four employee pension funds that threatens to make the financial crisis even worse.
The suit argues that the Illinois Constitution guarantees that municipal pension membership benefits are an “enforcible contractual relationship which may not be diminished or impaired.”
The Circuit Court suit further contends that retirees “have a property right to a lifetime health care plan” from the city “unreduced from the best terms” during their participation. Anything less would be a “depreciation of property rights” guaranteed by the 14th Amendment to the U.S. Constitution,” the lawsuit states.
The lead plaintiff in the lawsuit is Mike Underwood, a retired Chicago Police officer with Parkinson’s disease, whose service on the streets of Austin left him with a laundry list of injuries.
“I wasn’t hiding behind a desk somewhere. I earned these benefits. I paid for them with my blood. I was shot in the head and stabbed. I broke my hand, my leg, my ankle twice and fractured a vertebrae, a cheekbone and I can’t tell you how many ribs,” Underwood said Thursday.
“When I was hired in 1972, one of the benefits I was guaranteed was health care for life. Now that I’m old and sick, they want to take it away from me and put me on Obamacare. I’m not interested. Nobody knows what that cost will be or what it will cover. He’s throwing us into the unknown.”
Clinton Krislov, an attorney representing the retirees, said the lawsuit would not have been filed if the Emanuel administration had followed his recommendation to extend the current benefits for five years to give Obamacare a chance to shake out.
“It’s very easy for members of the mayor’s Retiree Health Benefits Commission who have no risk to say, ‘You’ll be better off if we dump you.’ But that scares retirees. These are the most vulnerable people in our society,” Krislov said. “After 26 years of interim settlements, it’s time to give retirees predictability to their lives and get a court declaration that their rights are, indeed, protected benefits under our constitution.”
A written statement from the city said: “While 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.”
Emanuel has acknowledged that retiree health care is an emotional issue that triggered a lawsuit and resulted in the 55 percent subsidy he wants to phase out by January 2017. But he has maintained repeatedly that Chicago taxpayers can no longer afford the subsidy.
“There’s another way to upset people, which is saddle ’em with a half-billion dollars worth of costs with no way to pay it. That, too, will have a lot of other people upset,” Emanuel has said. “What is now $109 million cost to the taxpayers grows to a half-billion dollars in a short time. I’ve got to make sure people have the options to avail themselves of health care, but not in a way that saddles taxpayers with a cost they have no way to pay for.”
The Chicago Sun-Times reported in mid-May that Emanuel had decided to extend the city’s 55 percent subsidy for retiree health care by six months — until Jan. 1 — then phase it out by 2017.
But 5,500 of the oldest and most vulnerable retirees will be guaranteed a 55 percent subsidy as long as they live.
Underwood doesn’t buy the mayor’s argument that taxpayers can no longer afford the subsidy.
“He’s got $55 million to give to DePaul for a basketball arena, $2 million bike rental program, $93 mill for bike lanes and $55 million for Maggie Daley Park. There’s plenty of money for other things, but not enough for the city to meet its obligations,” he said.
Last week, Moody’s Investors ordered a triple-drop in the city’s bond rating, citing Chicago’s “very large and growing” pension liabilities, “unrelenting public safety demands” and historic reluctance to raise local taxes that has continued under Emanuel.
Chicago’s pension and retiree health-care crises are inextricably linked because underfunded city pension funds now contribute 13 percent to retiree health care. Chicago taxpayers contribute 55 percent and retirees pay 32 percent.
If a Circuit Court judge sides with the retirees, the four pension funds would be compelled to continue their monthly subsidy at a rate of $65 for those eligible for Medicare and $95 for those who are not.