First Letter

Jim Norby Letter to Congress:

 February 17, 2004 

To Members of the United States Congress:

Last week two of America’s leading news organizations—The New York Times and ABC Evening News—carried stories about companies breaking their promises to retirees on health care insurance coverage.  In case you did not see these reports, I want to call them to your attention because they underscore the need to pass HR 1322 and include protections in the Medicare Prescription Drug Plan to prevent employers from eliminating currently provided benefits.

 The lead paragraph in the front page Times article on February 3 stated:  “Employers have unleashed a new wave of cutbacks in company-paid health benefits for retirees, with a growing number of companies saying that retirees can retain coverage only if they are willing to bear the full cost themselves.”

A few paragraphs later, the story notes:  “The costs can be a shock.  According to surveys by benefits consultants, companies that offer health benefits to retirees typically have subsidized about 60 percent of the premium.  Losing that support all at once can mean hundreds of dollars a month in unexpected costs.”

 The story referenced a recent survey by Mercer Human Resource Consulting stating that in 2003 only 36 percent of companies with 500 or more workers still offered a retiree medical plan to at least some retirees not yet eligible for Medicare.  This percentage is down from 50 percent in 1993.  

The story goes on to carry comments from retirees who had worked for TXU and Lucent Technologies.  They cited the added financial burden caused by their companies’ placing more of the cost of health care insurance on them.  I urge you to read the entire Times article by clicking on this link: http://www.nytimes.com/2004/02/03/business/03CARE.html?pagewanted=1&adxnnl=0&adxnnix=1075786788-5/XLPKnXe7fBv1+ShOV15Q

The report airing February 5 o the ABC Evening News with Peter Jennings carried the title “Broken Promises.”  The segment opened with Mr. Jennings stating: “ We are going to take a look tonight at some Americans who retired believing that their retirement health benefits would carry them through their later years.  In 1993, 46 percent of large U.S. companies offered health care coverage to their retirees.  By last year only 28 percent did so.  And, most of the companies that still provide benefits are charging employees increasingly more.  A lot of retired employees are bitter, and angry, and frightened.”

Following Mr. Jennings introduction, ABC News Chicago reporter Dean Reynolds profiled the increased health care coverage costs of two retirees—one from Lucent Technologies and the other from Johns-Manville.  Both are member associations of the National Retirees Legislative Network (NRLN).  The 61-year-old Lucent retiree whose wife has Parkinson’s disease has seen his health care premiums increase over the past 2-½ years from $32 to $577 monthly.  The 67-year-old Johns-Manville retiree read from his retirement handbook that his health care plan would be fully paid for by his company.  That has proven to be false.  This year the cost to him personally increased by more than 450 percent.

David Messick, a Northwestern University professor, stated in a sound bite: “Saying that the economic situation is a rough one is not an excuse for (companies) lying or breaking promises.”

The story concluded with a voice over by the reporter:  “To some the obvious answer is a government supported plan, but that could be expensive, require new taxes and be politically risky.  And yet politicians looking for solutions may want to keep in mind an important statistic.  The older you get, the more likely you are to vote.”

These two stories in the mainstream of the American news media is an indication of the increasing awareness of the ruthlessness that corporations are exhibiting in breaking their promises to retirees.  The NRLN looks forward to working with you in the weeks ahead to develop legislation that will restore the fair treatment this nations’ retirees deserve.

 Sincerely,

A.J. Norby

President

National Retirees Legislative Network