Companies ending retiree
Health-care problem will grow, experts warn
Vincent J. Schodolski Chicago Tribune: Feb.
LOS ANGELES - Tommy Johnson remembers the day when he opened the
letter from his former employer.
"It was a year ago that I got
the letter from AT&T," the retired computer engineer recalled. "It was nice.
Just before Christmas."
informed Johnson that the company-paid health-insurance benefits that he and his wife had been
guaranteed when he retired after 34
years with the company were being canceled. The company informed Johnson,
then 60,that continued coverage would cost him $411 a month.
choice I've got is to pay the $411, or else there would be no insurance for me
and my wife," he said.
Millions of Americans find themselves in the same situation as corporations seek
to control costs by ending or curtailing medical coverage for retirees.
Experts warn that continued increases in health-care costs and the looming
retirement of baby boomers ensures that the problem will grow.
an enormous issue and getting bigger," said David Martin, a management professor
at American University.
A study released this month by the U.S.
Centers for Medicare & Medicaid Services, a federal agency, projected that
annual spending on health-care services in the United States will rise from the
current $1.8 trillion to $3.4 trillion by 2013.
In an annual study released in January by the
Kaiser Family, Foundation, 71 percent of 408 corporations surveyed said they had
required retired workers to pay a bigger share of health-care insurance premiums
last year. Nearly 10 percent of the companies said they had eliminated such
benefits in the past year, and 20 percent said they would probably eliminate the
benefits by 2007.
Among the major corporations that have
reduced or eliminated health-care benefits for retired workers are UAL, the
parent company for United Airlines; Bethlehem Steel and Tribune Co., the parent
company of the Chicago Tribune.
The benefits problem is
especially acute for people who retire before 65. Too young for Medicare
benefits, they face the prospect of paying hundreds of dollars a month in
Even after they reach 65, Medicare has its shortcomings and
most people are forced to buy supplemental coverage.
For Johnson, the
$411 monthly premium is a major expense for someone receiving a monthly pension
of $1,457. He and his wife, who live in Birmingham, Ala., have no coverage for
glasses and are limited to two dental visits a year paid for by the insurance
Richard Diaz, a retired steelworker who lives in East
Chicago, Ind., lost health-care benefits when LTV Steel, his employer for 36
years, filed for bankruptcy.
He retired at 58 because of respiratory
problems brought on by exposure to asbestos, he said. To save money, Diaz sold
his house to his daughter and now lives with her, paying her a small
He was able to get early Medicare coverage, but his wife, Nancy,
has no coverage.
Experts say there is no easy way out of this
"The bottom line is that if we had national health-care
coverage, the problem would be solved," said Dianna Porter, director of policy
for the Alliance for Retired Americans, an organization that represents mainly
retired union workers.
But that is unlikely to happen, said David
certner’ director of federal affairs for AARP.
"We need to start
making changes in the way we control our costs," he said.
that the government rethink how people in long-term health facilities are cared
for, and that doctors be urged to review the amount of medicine prescribed to
Such suggestions offer little comfort to people like
"We retired under the
assumption that that health-care insurance would continue," he said. "I don't
want to sound like a crank, but these companies should be forced
to stand by what they said."