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Early-Retiree Insurance: a Broken Bridge?

August 30, 2010 - 6:00pm

Sixty-nine Florida businesses and government entities have been accepted into a new federal program designed to help employers and unions maintain health coverage for early retirees not yet eligible for Medicare.

The Early Retiree Reinsurance Program is designed to be a $5 billion bridge to the new federally mandated health insurance exchanges that begin in 2014.

In these tough economic times, it is difficult for employers to keep up with skyrocketing health-care costs for employees and retirees. Many Americans who retire before they are eligible for Medicare see their life savings disappear because of medical bills and exorbitant rates in the individual health insurance market, Health and Human Services Secretary Kathleen Sebelius said Tuesday.

The Affordable Care Acts Early Retiree Reinsurance Program will make it a little easier for employers to provide high-quality health benefits to their retirees as we work to put in place market reforms to lower costs for all," Sebelius said in a statement.

Nationally, more than 2,000 public organizations and private businesses nationwide will begin to receive reimbursements for employee claims this fall.

But U.S. Rep. Bill Posey said the program looks more like a shell game, and it could come up short financially.

"The timing of this announcement by the administration is interesting because earlier this month Medicare trustees issued a report noting on page 183 that the new health-care law will result in nearly 6 million retirees losing their prescription drug coverage from their former employers -- a fact that went largelyunreported," said Posey, R-Cocoa.

Posey added, "Nowhere in todays 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.

"It looks as though the administration is trying to put a positive spin on a new law that is increasingly unpopular," Posey concluded.

Arguing that the overall health-care law is unconstitutional, Florida and 20 other states are suing the federal government.

The White House said immediate action was needed to bridge the health-care gap for early retirees, noting that the percentage of large firms providing retiree coverage dropped from 66 percent in 1988 to 29 percent in 2009.

Adding insult to injury, officials said insurance premiums for older Americans are more than four times more expensive than they are for young adults, and the deductible these enrollees pay is, on average, almost four times that for a typical employer-sponsored insurance plan.

Nationally, we have received applications from more than 50 percent of Fortune 500 companies, all major unions, and government entities in all 50 states and the District of Columbia," Sebelius said.

Of the applications approved, 32 percent came from businesses, 26 percent from state and local governments, 22 percent from union sponsors, 14 percent from schools and other educational institutions, and 5 percent from nonprofits.

Though critical of so-called Obamacare generally, Associated Industries of Florida said it has taken no position on the reinsurance program.

"We recognize the difficulty businesses are having during this current recession to meet the health-care needs of their employees," said AIF Vice President Jose Gonzalez, who noted that "a handful" of AIF's member companies were included in the first round of acceptances.

The following 69 Florida entities were approved for participation:

Alachua County Board of County Commissioners
American Automobile Association, Inc.
American Maritime Officers Medical Plan
Blue Cross Blue Shield of Florida
Brevard County Board of County Commissioners
Brevard County Public Schools
Campus Crusade for Christ, Inc.
Celotex Corporation
Citrus Memorial Health Foundation, Inc.
City of Boca Raton
City of Clearwater
City of Hollywood
City of Jacksonville
City of Largo
City of Margale
City of Orlando
City of Palatka
City of Pinellas Park
City of Port St. Lucie
City of Sarasota Office of Accounting
City of St. Petersburg
City of Winter Haven, Fla.
Clay Electric Cooperative, Inc.
Clerk and Comptroller of Palm Beach County
County of Columbia Board County Commissioners
Crowley Holdings, Inc
CSX Corporation
Darden Restaurants, Inc.
Duval County Public Schools
Eckerd College Inc.
Escambia County Board of County Commissioners
Florida Keys Aqueduct Authority
Florida Keys Electric Cooperative Association, Inc
Fort Pierce Utilities Authority
Fraternal Order of Police-Miami Lodge 20 Insurance Trust Fund
Greater Orlando Aviation Authority
Gulf County School Board
Harris Corporation
Hydro Aluminum Adrian, Inc.
Independent Colleges and Universities Benefits Association
Lake County Board of County Commissioners
Lee County Board of County Commissioners
Lee County School Board
Martin County Florida Trade Name: Board of Commissioners
Martin Memorial Health Systems, Inc.
NECA-IBEW Local 1205 Family Benefit Fund
NextEra Energy, Inc.
Okeechobee County School Board
Orange County Government Board of County Commission
Orange County Library Board of Trustees
Orange County School Board
Orlando Utilities Commission
PricewaterhouseCoopers LLP
School District of Manatee County
Seminole County Sheriff's Office
St. Lucie County Fire District Employees' Health and Welfare Trust
St. Johns County School District
Stetson University, Inc.
TECO Energy Inc.
The School Board of Broward County, Florida
The School Board of Marion County, Florida
The School Board of Miami-Dade County, Florida
The School District of Escambia County
The School District of Osceola County
The St. Joe Company
The Wackenhut Corporation (TWC)
Town of Lantana
Tupperware Brands Corporation
Valencia Community College


Contact Kenric Ward at or (772) 801-5341.

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