Legislation overhauling U.S. health care includes $10 billion to pay some of the most expensive medical costs for millions of autoworkers, steelworkers, teachers and other early retirees with coverage.
The provision, embedded in legislation passed in July by House and Senate committees, may help offset health care concessions made earlier this year by the United Auto Workers as part of a government rescue of General Motors and Chrysler and related cost-cutting at Ford Motor Co.
The UAW cited the provision in an e-mail this week urging its members to support a health care overhaul, President Barack Obama’s top domestic priority. Health care measures have yet to clear the full House and Senate.
Company, municipal and union- sponsored plans that meet eligibility would be reimbursed for 80 percent of the health costs from $15,000 to $90,000 for early retirees ages 55 to 64, according to the legislative proposal.
“It’s probably going to cut a big chunk of costs,” said Jon Glaudemans, a senior vice president at Avalere Health LLC, a health-policy consulting firm in Washington, D.C. “At that age, you’re either using a very little or a lot of your coverage. I would expect a substantial amount of an employer’s costs comes between $15,000 and $90,000 in claims.”
At least 1.7 million of about 4.8 million U.S. retirees ages 55 to 64 have employee-based health benefits, the Employee Benefit Research Institute said in a report this month.
Most of the covered retired employees ages 55 to 64 are in unions or government jobs because private employers are dropping their nonunion retiree coverage at an accelerated rate, said Paul Fronstin, director of health research programs at the Employee Benefits Research Institute.
“This is a Band-Aid on a gushing wound,” Fronstin said. “It’s not a permanent solution.”
