Retirees thrown under health reform bus

To the editor:Those in our community still among the fortunate 18.5 million American retirees receiving employer-provided health-care coverage are split into two groups:• 14.3 million are Medicare-eligible, receiving employer-provided health care as supplemental insurance. According to the Congressional Budget Office, this includes 9.5 million people receiving employer-provided drug coverage, thus obviating the need for Medicare Part D, which in most instances would be more costly.• 4.3 million are too young for Medicare and have employer-sponsored health care as primary coverage.In 2004, when the Medicare Modernization Act (creating Medicare Part D) was first passed, there was a fear that employers who were providing retiree drug coverage would use the law as an excuse to drop their Medicare-eligible retirees, forcing the government to take over. So a very lucrative deal was offered to employers. For every $100 the company spends on retiree drug benefits, Medicare sends it a subsidy payment of $28. On top of that, the companies got a rare double tax break. The $28 subsidy is tax-free, and the company was allowed to deduct the entire $100 as a business expense.The new 2010 version of health reform has left the 28 percent subsidy intact and continued to exempt it from taxation. But companies will no longer be allowed to deduct the subsidy from their tax return as if it were an expenditure of their own. This has caused major corporations to weigh the cost of their plans against the $2,000-per-employee/retiree penalty that would be imposed by the new federal law should they drop the health plan coverage altogether.According a 2009 Kaiser Family Foundation study, the average costs for an employer-provided health plan approaches $5,000 for an individual and over $13,000 for a family. If you were an employer, could you imagine a better boost to your bottom line than to get out of the insurance business?If you were an employer wouldn’t you gladly accept the penalty if it would save millions of dollars? Wouldn’t it be irresponsible to your stockholders to do otherwise? Wouldn’t Congress have the intelligence to anticipate this obvious result?Whatever the motivation, Congress has kept the employer penalty low and private sector employers are presented with an open invitation to drop health coverage for both active and retired employees.Retirees need action from Capitol Hill before Washington takes its summer break for election primaries.Members of Congress should be asked why they allowed retirees to be thrown under the proverbial bus by providing such an employer inducement to drop coverage and how they plan on fixing the mess they created for us.

Joseph LaFrance

Categories: Cook on Concord