The Week in Review - November 11-15

Week in Review for week of 11/11/13 through 11/15/13

Health Care

·         House Republicans lead effort to enable Illinoisans to keep their health care coverage.  HR 702, sponsored by Rep. David McSweeney (R-Cary), responds to news of widespread health insurance cancellations and the catastrophic breakdown of, the federal health insurance marketplace website.  The bipartisan resolution, introduced on Friday, November 15, calls on the U.S. Senate to enact the Keep Your Care Act, a law approved by the federal House.

The Keep Your Care Act would freeze and reverse the current tidal wave of insurance cancellations and replace them with a new law that will enable Americans with health insurance to renew their policies.  Their policies, if they keep them, will be valid under the “Obamacare” mandate, and people in this status will be able to have insurance of their choosing without paying a federal income tax penalty.     

·         Illinoisans sign up for taxpayer-funded Medicaid as result of Obamacare.  More than 205,000 separate applications have been filed by new patients and patient households through three separate programs affiliated with the federal Affordable Care Act (ACA), commonly known as “Obamacare.”  The 115,000 Cook County pre-applications through a special “window,” aimed at previously ineligible adults without dependent children, have been supplemented by 46,000 applications-by-mail from food stamp recipients and 44,000 online applications. 

While most of the new ACA-related Medicaid patients will have their initial costs 100% covered by the federal government, some of the new patients will not be eligible for full federal reimbursement and their care will be paid for by State taxpayers.   Furthermore, even the fully eligible new Medicaid enrollees are scheduled to start transitioning out of full federal reimbursement status after three years.

·         Only 1,370 Illinoisans enroll in private-sector side of Obamacare.  In “opt-in” states such as Illinois, the Affordable Care Act implements not one, but two separate groups of health care services.  Program A is a massive expansion of Medicaid to bring in economically challenged Illinoisans who had not previously been eligible; it is a public-sector program in which medical service professionals see patients, provide a wide variety of medical services to them, and then bill the State and federal governments for compensation.  Program B, by contrast, is a program that relies upon both the public and the private sector.  While it is meant to be enforced by the U.S. Internal Revenue Service, it includes a controversial private-sector mandate.  It places a new requirement on a wide variety of Americans – mostly Americans with more means than the group granted increased Medicaid eligibility – if they do not currently have health insurance, or if their insurance has been cancelled.  If they are in these categories, then the ACA says that they must go to the private sector and try to buy one of the health insurance policies that the heavily government-regulated marketplace, overseen by “Obamacare” government agencies, will allow them to buy.

Figures released by the federal government on Wednesday, November 13 showed that only 1,370 Illinoisans had as of the end of October made their way through the maze-like process and selected a mandatory private-sector health care for purchase.  This number marked only a small fraction not only of the more than 12 million people of Illinois who all need access to stable health care, but also of the more than 200,000 additional Medicaid patients added to the State’s Medicaid rolls as of mid-November 2013.  However, this minimal number of successful Illinois participants matched the numbers reported by many other U.S. states which have been required to cooperate with the ACA.

While the current Affordable Care Act status of Illinois shows a thriving Medicaid public-sector expansion picture, the private-sector ACA health insurance picture is currently very different.  President Obama admitted serious flaws in rolling out the private-sector segment of the ACA in a Washington press conference on Thursday, November 14.  Meanwhile, HR 680, sponsored by Representative Darlene Senger (R-Naperville) and 43 Republican colleagues, responds to these problems by calling for a delay in implementation of the individual health-insurance mandate.


·         House Republicans point out sharp change in U.S. coal policy.  They have signed a letter to the U.S. Environmental Protection Agency, pointing out the likely effect that recent federal administrative rules changes will have on the coal industry in both Illinois and other states.  The rules changes, which are described as responses to the external costs imposed on the atmosphere and groundwater by burning coal and disposing of coal ashes, are adding ongoing costs to the operations of coal-burning electric power plants.  Coal boiler owners are finding it difficult to obtain financing to carry out major renovations or improvements, and large coal burning-firms, such as Midwest Generation, have been forced to file for bankruptcy.     

Any federal moves to discourage coal burning could have a significant impact upon troubled Downstate job markets, where all of Illinois’ coal production is mined.  Approximately 4,000 Downstate Illinois miners dug 47.2 million tons of coal in calendar year 2012, and economists believe that more than 31,000 Illinois jobs are coal-related.  The letters, signed by Representative C.D. Davidsmeyer (R-Jacksonville), Jil Tracy (R-Quincy), and 17 other members of the Illinois House, were described in the press on Tuesday, November 12.


·         Department of Natural Resources (DNR) says it is working on schedule to start up oil and gas fracking within Illinois.  The State agency is working with energy production professionals and environmentalists to draft administrative rules that will be used to govern the multistage energy production activity.  Fracking has been acclaimed throughout the U.S. economy as the major cause of a dramatic upswing in North American oil and gas production, with American crude oil production up 50 percent since 2008.  In October 2013, the United States produced crude at a rate of 7.7 million barrels per day, and surpassed Russia as the world’s number one oil-producing nation.  However, Illinois has not up until now been a participant in this trend line.  

DNR indicated on Thursday, November 14 that its fracking rules were nearing completion.  The Illinois fracking law, enacted by the General Assembly in May 2013 as SB 1715, directs DNR to closely supervise each fracking well under guidelines to be established by rule with input from key stakeholders.  The actual drilling will not be allowed to start until the rules are in place.    

General Assembly

·         Illinois lawmakers could return for December special session.  The special session, which could be called by either the Governor or the two majority leaders of the Illinois House and Senate, would deal with outstanding business items left on the table when the “veto session” adjourned in early November.   Issues that could be discussed include pension reform, job creation, changes to the tax code, and extending the life of the State’s pilot “advance deposit wagering” program that allows approved horseplayers to follow races and place bets from mobile locations.  Word of the possible special session was distributed to Illinois House members on Wednesday, November 13.


·         Chicago Park District pension bill sent to Governor.  A bill to reform the separate pension system that oversees benefits for 6,100 current and former employees of the Chicago Park District was on the Governor’s desk this week.  SB 1523, which was approved last week by majorities of all four caucuses of the Legislature, adjusts the formula used to calculate future changes in defined benefits going forward.  Instead of a fixed escalator to provide for increases in the cost of living (COLA), the SB 1523 formula is meant to ensure that individual benefits will increase by either 3 percent per year or one-half of the increase in the consumer price index, whichever is less.  SB 1523 also adjusts the ages at which current Park District employees will be eligible to retire and start collecting their paychecks.

The Chicago Park District is a unit of local government.  Although its operations are not directly funded by the State, its operations are required to follow State law.  Lawmakers became concerned when they found that the unique pension system that covers the employees of this park district is currently an estimated $550 million in the red.  The unfunded liabilities of this one pension fund thus account for more than $200 per Chicago resident.  Actuaries have stated that COLA changes like this can be used to sharply reduce the unfunded liabilities of a pension system.  In the case of the Chicago Park District, the new law could possibly reduce future Chicago property tax increases which would otherwise be necessary to maintain the solvency of the system. 

Nothing in SB 1523 affects the formulas used to calculate pension benefits for persons with vested “Tier 1” status in the four non-judicial State-managed pensions systems, but continued discussion of the SB 1523 formula could indicate how these systems, too, may be adjusted in the future.


·         Governor Quinn refuses to pledge to roll back State income tax rates starting January 1, 2015.  The temporary January 2011 tax hike, which increased State individual income taxes from 3.0% of declared income to 5.0%, was enacted as a short-term fix for plunging State general revenues.   Statutory language in the law will reduce the individual income tax rate from 5.0% to 3.75% in 2015.  However, Illinois’ ongoing budget crisis has led to fears that this promised tax cut will be repealed.  The current 5.0% tax rate is not generating sufficient general funds revenues to pay all of Illinois’ past-due bills.

With these facts in mind, reporters asked Gov. Pat Quinn on Wednesday, November 13 whether he would pledge to uphold the income tax rollback.  The Governor failed to respond to the question, calling instead for State pension reform.  


·         Naperville-based OfficeMax merges into Office Depot.  Key work in the merger was announced this week, with the selection on Tuesday, November 12 by the merged firm’s board of directors of turnaround expert Roland Smith to be the merged firm’s CEO.  The new Office Depot will be a nationwide retailer/distributor of office supplies, competing with industry leader Staples Inc. 

One of Smith’s first duties will be the selection of a consolidated headquarters location for the merged firm.  The two former CEOs of OfficeMax, based in Naperville, and Office Depot, based in Boca Raton, Florida, have both resigned and left the company.  Both Florida and Illinois are competing for the designation.  In Illinois, OfficeMax his historically maintained a non-retail workforce of approximately 2,000 to maintain the operations of the corporation.