NRLN Press 

National Retiree Legislative Network
Washington, DC

National Retirees Group Opposes

Medicare Prescription Drug Plans

 

(WASHINGTON, July 7, 2003) – The National Retirees Legislative Network (NRLN) is calling on its more than two million members and all other retirees to oppose U.S. Senate and House of Representative plans to add a prescription drug benefit and private option to Medicare, according to organization president Jim Norby. The NRLN is a Washington-based grassroots coalition of retiree and older worker organizations dedicated to protecting the pension and health benefits of their members. 

“These bills, which are currently in the House-Senate conference committee, are a witches’ brew of unappetizing and misconceived proposals that promise to do more harm than good.  They establish huge gaps in reimbursable prescription drug coverage, while doing nothing to prevent companies from erasing their existing retiree prescription drug insurance programs.  The combined effect of both of these flaws will be to sabotage the finances of middle-class seniors, wipe out thousands of company-provided retiree prescription drug programs, and send untold numbers of ailing retirees to the poorhouse,” Norby said. 

Citing Massachusetts Institute of Technology economics professor Jonathan Gruber, Norby points out that employers will react to this legislation by scaling back their drug coverage for retirees.  This view is supported by Congressional Budget Office estimates showing 37 percent of retirees, or 4.4 million people will lose drug coverage under the Senate bill and 31 percent will lose coverage under the House version. 

“The primary beneficiary of this legislation is big business, including giant corporations such as General Motors and General Electric, which can shed their retiree prescription drug insurance plans and unload their retirees on the new but deficient Medicare drug program,” Norby said.  

Norby criticized those House of Representative and Senate members who supported this legislation knowing that it is not in the best interest of retirees.  “These legislators think they have passed a landmark Medicare innovation which will be improved with the passage of time.  Instead, they have licensed every company in the country to terminate its retiree prescription drug coverage and pass the buck to the government and taxpayers.

 

“As a life-long Republican, I’m especially discouraged by the lack of support we receive from elected Republicans when it comes to issues that negatively impact the health and pension plans of retirees.  Being older, many of our members have tended in the past to follow conservative views, but this is changing dramatically as we are being forced to shift our allegiance to Democrats in the House and Senate who tend to be more supportive of our interests,” Norby said.

 

The House and Senate action on prescription drug benefits follows on the heels of controversial cash balance regulations issued by the Internal Revenue Service (IRS) earlier this year.  In testimony opposing those regulations, Norby stated that those regulations enable employers to radically reduce future pension liabilities, which make their financial statements appear more profitable.  Such manipulations result in higher cash bonuses and stock options for company executives at the expense of older workers who lose the opportunity to accrue benefits under their prior traditional defined benefit plans.

 

Norby compares the House and Senate Medicare prescription drug proposals to the IRS regulations that degrade the funding of defined-benefit pension plans. “By shifting the cost of prescription drugs to Medicare, employers will be able to cut billions of dollars in benefit costs and artificially inflate and distort reporting of corporate profitability.  The result will be undeserved cash bonuses and rejuvenated stock options for top executives, again at the expense of retirees,” Norby said. 

 “More than 10 million retirees are at risk of having to withdraw from their pension or savings to cover drug costs, or seeing their company retiree drug plans cancelled altogether, if this legislation is signed into law.  To prevent this from happening, we strongly urge retirees to let their representatives in Congress know that these bills must be scrapped,” Norby added.

Based in Washington, D.C., NRLN represents nearly two million retirees from Association of US WEST Retirees, Association of BellTel Retirees, Prudential Retirees, Monsanto Retirees, Raytheon Retirees, along with groups from Boeing, GE, GM, IBM, Johns Manville, Lucent Retirees, Portland Electric (Enron), SNET, Western Union and others. .