USA Today Looks at Employers Cutting Benefits
Rising health care costs and a weakening economy are leading many large employers to reduce their retirees' health benefits, a trend that is "angering" many retirees, USA Today reports. According to the benefits firm William Mercer, 25% of companies that offer health coverage to retirees have increased premiums in the past two years, and 10% have raised deductibles and copayments. In addition, a recent report from the General Accounting Office found that only 37% of firms offer health benefits to employees under 65 who take early retirement, compared to about 70% in the 1980s. "To control the rising costs of health care, we have had to ask retirees and current employees to share the cost," Melody Dunbar, a spokesperson for Denver-based Johns Manville Retirees Association. Several employer reductions have led to legal action by retirees who believed their benefits were guaranteed, USA Today reports. More than 16,000 retirees from Monsanto, for instance, are suing the company over a cut in benefits that occurred when a portion of the corporation was "spun off into a separate company." Rep. John Tierney (D-Mass.), has introduced legislation (HR 1322) that would ban companies from altering benefits after a worker retires and would "undo changes" that companies have already made. While the Tierney bill has the support of retiree groups, the ERISA Industry Committee, a trade association that represents 115 large employers, says that the bill would lead fewer employers to offer retiree coverage. Anthony Knettel, vice president of health affairs for ERIC, said, "There's a question of fairness of employers getting locked into a rapidly escalating financial commitment they had never, in fact, promised to make. When employers see this kind of legislation, there's a strong incentive to say, 'Let's get out of this benefit now, before we no longer have a chance'" (Appleby, USA Today, 7/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.