Jeri Shanahan, a retired teacher, has researched the issue for several years; she has talked to dozens of legislators and various officials over this duration, but the injustice remains unresolved.
Retirees, 65 and older and not eligible for Social Security and Medicare, will pay the highest premium for Teachers’ Choice Health Plan in 2014: $719.96 (Illinois Department of Central Management Services (Link for Benefit Recipient Rates, CMS). They are also paying more than twice as much as retirees not eligible for Social Security and Medicare but living out-of-state.
Imagine the effects of Senate Bill 1 on retirees 65 and older who live in Illinois and without Social Security and Medicare. Of course, many powerful and wealthy people do not care about anything except their influence and fortune. But what does union leadership believe about this discrimination of age, residency and (possibly) gender? Do they believe these retirees have “equal rights, which equal laws must protect?” (Thomas Jefferson). Moreover, imagine the severe effects of Senate Bill 2404 on retirees 65 and older who live in Illinois and without Social Security and Medicare. Making a choice between a compounded Cost-of-Living Adjustment and health care may be making a choice between abject poverty and death.
So why isn’t there a consistent and fair rate-setting methodology for premiums? Does anyone know how these rates are determined? Why doesn’t the governor-appointed Teacher Retirement Insurance Program Committee convene at least four times a year according to state statute? After all, the committee’s main function is “to consider and make recommendations on issues affecting the program of health benefits for retired teachers” (Link for Teacher Retirement Insurance Program Committee). Is Central Management Services at fault?
Schedule of Findings
According to the Illinois Department of Healthcare and Family Services:
TEACHER HEALTH INSURANCE SECURITY FUND
For the year ended June 30, 2012
12-1. FINDING (Lack of written rate-setting methodology)
The Illinois Department of Healthcare and Family Services did not have a documented written rate-setting methodology to calculate the insurance rates that are used to determine the premium rates charged to participants for the Teachers’ Retirement Insurance Program (TRIP).
We noted that only one individual was involved in calculating the insurance rates and there was no written rate-setting methodology of how this individual calculates the TRIP insurance rates. This individual left the agency near the end of the fiscal year and the Department did not have any other employees aware of how the previous individual calculated the rates. Additionally, there was no formal process for a documented review of the insurance rate calculation.
Further, auditors noted that the Department provided the Teachers’ Retirement System of the State of Illinois by April 15th with historical and projected data on enrollment, utilization, and costs of TRIP information which is used to determine the amount of health care premiums charged to participants in TRIP; however, there was no rate-setting methodology provided explaining where the information was obtained from and how the information was used to determine the premium rates.
The State Employees Group Insurance Act of 1971 (5 ILCS 375/6.5(e)) requires the Director of the Department of Central Management Services to determine the insurance rates and premiums for Teachers’ Retirement System benefit recipients and dependent beneficiaries, and present to the Teachers’ Retirement System of the State of Illinois, by April 15th of each calendar year, the rate-setting methodology (including but not limited to utilization levels and costs) used to determine the amount of the health care premiums.
Executive Order 2005-3, Executive Order to Reorganize Agencies by the Transfer of Certain Healthcare Procurement and Administrative Functions Primarily of the Department of Central Management Services to the Department of Healthcare and Family Services issued by the Governor on April 1, 2005 transferred the respective powers, duties, rights and responsibilities related to State Healthcare Purchasing from various departments, including CMS, to the Department of Healthcare and Family Services. The Executive Order states the statutory powers, duties, rights and responsibilities of the various agencies, including CMS, derive from various statutes including 5 ILCS 375 et seq. The functions associated with State Healthcare Purchasing intended to be transferred included rate development.
Executive Order 2012-1, Executive Order to Reorganize Agencies by the Transfer of Certain Functions of the Department of Healthcare and Family Services to the Department of Central Management Services, the Department of Corrections, the Department of Juvenile Justice, the Department of Human Services, and the Department of Veterans’ Affairs issued by the Governor on March 1, 2012 transferred the respective powers, duties, rights and responsibilities related to State Healthcare Purchasing from the Department of Healthcare and Family Services back to various departments, including CMS. The departments had until September 30, 2012 to complete the transfer of functions.
Good internal controls would require that no one individual should control a key aspect of a transaction or event. The Statewide Accounting Management Systems Manual (Procedure 2.50.10) requires duties and responsibilities be assigned systematically to a number of individuals to ensure that effective checks and balances are in place and routinely practiced.
A formal written rate-setting methodology would provide clear procedures and specific documentation requirements for ensuring that insurance rates are being calculated consistently and the correct premium rates are being charged for TRIP.
Department management stated that the rate-setting calculations are performed via formulas retained in electronic spreadsheets and staff resources were not available to convert the electronic methodology into written procedures. Executive Order 2012-01 transferred the Office of Healthcare Purchasing from HFS back to CMS effective July 1, 2012.
Without a formal written rate-setting methodology, the Department cannot ensure that the insurance rates are being calculated consistently and correct premium rates being charged for TRIP are in accordance with State statutory requirements. In addition, over reliance on one individual for the calculation of TRIP insurance rates without a proper written rate-setting methodology subjects the State to potential disruption in the event that there are changes to that individual’s employment status. (Finding Code No. 12-1, 11-2, 10-1)
We recommend the Department develop a formal written rate-setting methodology as required by the State Employees Group Insurance Act and submit it to the Teachers’ Retirement System.
Executive Order 2012-01 transferred the Office of Healthcare Purchasing from HFS back to CMS effective July 1, 2012. The functions associated with State Healthcare Purchasing and the development of a formal written rate-setting methodology is now the responsibility of CMS.
A. FINDING (Financial statement preparation)
IS THERE A REASON WHY THE TEACHER RETIREMENT INSURANCE PROGRAM COMMITTEE HAS NOT MET FOR YEARS?
Despite a statute that requires the Committee to convene at least 4 times each year, I was told as long as the rate does not increase more than five percent each year, this committee does not have to convene. I was also informed that the former committee chairperson (Colm Brewer) had resigned, no one had been appointed to take his place, the committee had not met for a few years, and Central Management Services had not requested any meetings.
TEACHER RETIREMENT INSURANCE PROGRAM COMMITTEE
Authority: [Link for] 5 ILCS 375/6.5 (g-5) Year of Creation: 2004 (PA 93-679)
Number of Members: 10 Number appointed by Governor: 10
Vacancies: 0 Governor Vacancies: 0…
Purpose: To consider and make recommendations on issues affecting the program of health benefits for retired teachers. The Committee shall convene at least 4 times each year.
Compensation: Not noted in statute
Expenditures: FY 2007 FY 2008 FY 2009
Member Per Diem/Reimbursement
Other Per Diem/Reimbursement
All Other Expenditures
Total No expenditures, no meetings FY 2007 – FY 2009
For board meetings
Required Work Products:
The statute requires the Committee to convene at least 4 times each year.
No meetings. According to the Governor’s Office of Executive Appointments has no expenditures and has not met to conduct business.
No vacancies as of June 2010
Link for State of Illinois Office of the Auditor General, Management Audit, September, 2011, Vol. II, Detail on Boards and Commissions (see page 314)
More Sources & Links:
Financial Audit for the Year Ended June 30, 2012
Summary Report Digest from the Office of the Auditor General
Teachers’ Choice Health Plan