KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Employers From Nearly Every Sector Of Economy Applying For Health Overhaul’s Early Retiree Subsidies

Seven states that are suing the federal government to throw out the health overhaul are also preparing to take subsidies that will help them afford medical costs for retirees, The Associated Press reports. "An administration official said Tuesday seven states suing the federal government are among 16 already approved for subsidies to help with the health care costs of early retirees. The seven are Arizona, Idaho, Indiana, Louisiana, Michigan, Nebraska and Nevada." In addition, 2,000 employers have been approved for the extra help, which provides $5 billion in total to help employers maintain health coverage for their early retirees older than 55 but not eligible for Medicare. "The government subsidy amounts to 80 percent of medical claims between $15,000 and $90,000 - significant assistance to help cover high-cost retirees and eligible family members" (Alonso-Zaldivar, 8/31).

Modern Healthcare: "The approved applications represent nearly every sector of the economy: 32% from businesses, 26% from state and local governments, 22% from union sponsors, 14% from schools and other educational institutions and 5% from not-for-profits" (Lubell and Vesely, 8/31).

Bloomberg: "Businesses led by financial services company Deutsche Bank Americas Holding Corp., food and beverage maker PepsiCo Inc., drugmaker Pfizer Inc., communications provider AT&T Inc., and carmaker General Motors Co. qualified for U.S. funds. About half of the companies in the Fortune 500 applied for U.S. funds to help cover costs for early retirees, the Obama administration said in a statement on 'In these tough economic times, it is difficult for employers to keep up with skyrocketing health care costs for employees and retirees,' Health and Human Services Secretary Kathleen Sebelius said in statement today." The program will run until 2014, when it ends and a competitive health insurance marketplace - as well as tax credits - is in place to provide more affordable options to early retirees and others (Armstrong, 8/31).

The Wall Street Journal: The number of companies seeking the assistance "is stoking concerns that the program will run out of money before it's due to expire in 2014, when insurers face tighter restrictions that will prevent them from denying care to older Americans and limit how much more they can charge them than younger consumers" (Adamy, 8/31).

The Washington Post: "The share of large firms providing such coverage dropped from 66 percent in 1988 to 29 percent in 2009, though not much of that decline occurred recently. Because of their age and higher likelihood of having a pre-existing condition, early retirees attempting to buy insurance on the individual market face premiums that are four times those of young adults, if they get covered at all" (Aizenman, 9/1).

Los Angeles Times: "A report by the nonpartisan Employee Benefit Research Institute estimated in June that the $5 billion would be exhausted in 2012. If that should happen, Congress would have to appropriate more money to keep the program operating" (Levey, 9/1).

Sunshine State (Fla.) News: "U.S. Rep. Bill Posey said the program looks more like a shell game, and it could come up short financially. ... 'Nowhere in today's HHS release is there a reference to HHS' own warning to retirees that this program is largely unfunded - by perhaps tens of billions of dollars. Furthermore, by failing to prioritize the limited funding that is provided on the most needy individuals, they end up providing taxpayer subsidies to some very profitable Fortune 500 companies. The way HHS is running this program is irresponsible,'" Posey said. Nearly 70 companies in Florida were approved for the program (Ward, 9/1).

In Virginia, nearly four dozen applications have so far been approved, the Richmond Times-Dispatch reports. Even a tobacco company has qualified. "Henrico-based Altria Client Services, a subsidiary of Altria Group Inc., which owns Philip Morris USA and U.S. Smokeless Tobacco, is pleased that its application was approved, spokesman Kenneth Garcia said. 'Altria and its tobacco companies make a significant investment in the lives of our more than 6,000 eligible early retirees by providing generous health-care benefits during the years they do not yet qualify for Medicare,' he said" (Smith, 9/1).

(Fort Wayne, Ind.) Journal Gazette: "Although [Indiana] Gov. Mitch Daniels has been a constant opponent of the law, the state applied for the insurance program for its early retirees. Jane Jankowski, Daniels' spokeswoman, said: 'Congress approved health care reform, and the president signed it into law. Gov. Daniels does not agree with it, but Indiana will seek funds that help Hoosiers when there are no complicated strings or costs attached'" (Smith, 9/1).

The same is true in Louisiana, The (New Orleans) Times-Picayune reports. "Louisiana Gov. Bobby Jindal continues to criticize the legislation, despite the state's participation in the program designed to provide state retirees with health coverage. 'The Obama health-care legislation is awful and will harm the quality of health care in America,' said Jindal spokeswoman Melissa Sellers, who also called it 'the largest unfunded mandate in history.' But Sellers said Jindal 'won't penalize Louisiana retirees from accessing funds available through the flawed legislation'" (Alpert, 8/31).

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