I found the following article which appeared in the Long Island newspaper "Newsday" on June 18th to be very interesting considering our present situation with CBS medical:
Health Benefits Don't Get Better With Age!
When you get to be 80, you ought to be able to count on a few things, like the health insurance benefits you were promised by your employer and union when you put in enough years on the job. But Joe and Ruth Werner of Riverhead have discovered that the promises were empty.
Indeed, millions of retirees - from public as well as private employment - are under siege by unexpected and rising out-of-pocket health care costs as some firms and agencies raise premiums and others cut or end benefits re-tirees thought they had for life. The cost of health coverage for retirees has become a heavy financial burden for businesses fighting the slump, and other companies hope for relief from a Medicare prescription drug benefit.
Joe Werner worked for Metro-North Railroad for 35 years, supervising a cleaning crew in Grand Central Terminal before retiring in 1986. Ruth Werner, who retired as an office worker for a retail chain, went with her husband's health insurance because the Metropolitan Transportation Authority, a state agency, seemed financially solid and provided better benefits at little cost, supplementing Medicare and covering prescription drugs.
Earlier this year, however, a "dear retiree" form letter from Metro-North told the Werners their monthly premium would be raised again, from $120 to $170.95 for each of them, "due to the cost and utilization in prescription drug benefits." Now, their yearly cost for in- surance is $4,103, which does not include nearly $1,300 in Medicare premiums, plus co-payments for drugs. They will pay for this from a fixed income of $2,288 a month from rail-road retirement benefits.
"We're still surviving, but we're running out of room to maneuver," Ruth Werner said. "When are these increases going to end?"
Not anytime soon, said Kate Sullivan, health policy director for the U.S. Chamber of Commerce. "I don't see any relief unless health care costs start leveling off or the Congress provides more funds for Medicare." Health care costs are rising by 18 percent to 20 percent a year for retirees from public agencies as well as private companies, she added, and mostly because of prescription drugs, which account for 40 per-cent to 60 percent of the spending on retiree health benefits.
Gray Matters (a senior publication) warned six years ago, when Grumman pulled back on retiree benefits, that employers may make arbitrary cuts, raise premiums or even terminate benefits unless they had promised not to do so in writing. But most of the promises have been verbal, and the Supreme Court gave companies the green light for such changes.
Most retiree benefits have paid for Medigap plans to supplement Medicare coverage and include prescription benefits and dental or eye coverage, for which the company paid. Now, companies are dropping such benefits, and many are no longer offering to pay even part of the cost of Medigap policies for retirees. Nearly 97 percent of the nation's small firms do not offer retirees health benefits.
And more than a third of the largest American firms no longer offer retiree health benefits, according to a study by the Kaiser Family Foundation.
Even the U.S. Chamber of Commerce has joined the growing number of public agencies and private businesses that no longer offer retiree health benefits to new workers, said Sullivan.
Retirees who are hanging on to coverage have been hit with cuts in benefits, the refusal to cover certain non-generic prescription drugs, and sharp increases in co-payments and premiums.
While concern for the bottom line is the most obvious reason for the crisis, the problem is more subtle. Every corporation, said Sullivan, is obliged by law and accounting rules to report its forecasts of future retiree health care costs against earnings. As liabilities increase, earnings are lowered and balance sheets suffer.
In April, at the request of a congressional committee, the U.S. General Ac-counting Office reported on the obligations for retiree health benefits faced by the beleaguered airlines, the steel and metals industry and auto manufac- turers. For instance, General Motors' obligations increased to $52 billion last year from $44.6 billion two years ago. US Airways, which is near bankruptcy, had obligations of $1.4 billion in 2001 compared to $1.1 billion in 1999.
American Airlines' obligations climbed to $2.7 billion last December from $1.3 billion in 1999. And in the steel and metals industry, Alcoa's obligations rose to $3 billion from $1.6 billion.
Unless Congress grants them relief from soaring health care costs for retirees, said Sullivan, corporations will continue to reduce their liabilities by charging retirees higher premiums, cutting or ending their benefits and even scaling back on health coverage for active employees. U.S.-based companies, she said, cannot remain competitive if they must drag the anchor of increasing retiree health liabilities.
In Holland, Mich., Kraft Foods is closing its Life Savers plant and moving it to Canada, where the government will pay for the health insurance of employees. Corporations in bankruptcy leave retirees without coverage.
Big steel, which has sought trade protection from European manufacturers, whose workers have national health insurance, has also asked the United States to help pay its "legacy costs" - its obligations to retirees.
Strengthening Medicare with a prescription benefit that controlled costs would slow the rise in health care liabilities, said Sullivan.
But there is a more fundamental lesson cited by health care experts - employer-funded health insurance is a mistake, for health care for Joe and Ruth should not depend on anyone's bottom line.
Write to Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY 1747-4250, or by e-mail at email@example.com.
Health Benefits Don't Get Better With Age Newsday June 18, 2002