Projected Rise in Health Insurance Expenditures for State Employees

Health insurance expenditures for the state are projected to rise significantly, impacting both the budget and state employees' contributions next year. The Department of Central Management Services (CMS) recently informed a legislative panel that they anticipate a total system cost increase of $380 million, or 9%, for the fiscal year 2027. This escalation would bring the total expenses covered by all funding sources to approximately $4.6 billion.

The projected growth rate represents a deceleration compared to previous years. The current fiscal year saw an increase of $402.8 million, or 10.5%, over fiscal year 2025, which itself had a nearly 15% rise over the prior year. Factors contributing to these rising costs include an expanding state workforce, as the state has added about 10,000 employees since 2019. Currently, the health plan covers approximately 470,000 individuals, including employees, retirees, and eligible dependents.

CMS Director Raven DeVaughn highlighted general inflation within the healthcare sector as a key contributor to this upward trend. "Certainly, there's the general idea of inflation that we are all just fighting through as a country,” she stated. “We can't quite point to one specific thing that has increased our liabilities.” Data from CMS indicates that the average cost per participant is projected to rise by 8.3% next year, reaching $12,051. This marks a 45.7% increase over fiscal year 2018.

The state's health benefit plans, offered to employees, are financed through a mix of state funds, employee premiums, prescription drug rebates, and other revenue sources. The primary funding source, the state's general revenue fund, is expected to increase by 12.8% to $2.8 billion in the upcoming fiscal year. In contrast, contributions from the road fund are anticipated to decrease by 10% to $155.5 million, while funding from university funds should remain steady at $45 million.

Additionally, member contributions are projected to grow by $30 million, or 4.9%, reaching $637 million, comprising about 14% of the total revenues for the system. Employee premiums, influenced primarily by collective bargaining agreements, are set to rise by $8 per month for employees and $4 per month for dependents in fiscal years 2026 and 2027, which conclude the current labor agreement.

Capitol News Illinois, funded mainly by the Illinois Press Foundation and the Robert R. McCormick Foundation, provided this information as part of their state government coverage.