On H.R. 1322, The Emergency Retiree Health Benefits Protection Act Of 2001
Q.
What is H.R. 1322 and what does it propose to do?
A. H.R. 1322, The Emergency Retiree Health Benefits Protection Act of 2001, was introduced on March 29, 2001 by Representative John F. Tierney (D. Mass.). It now has
91 co-sponsors in the House. As of yet there is no companion legislation in the U.S. Senate, but several Senators have expressed support for H.R. 1322 and NRLN is working to get a similar bill introduced in the Senate. H.R. 1322 would amend the Employee Retirement Income Security Act of 1974
(ERISA) by
(1) prohibiting companies from making post-retirement cancellations or reductions in the health benefits that were provided to employees when they retired,
(2) requiring companies (except for small
employers) to restore retiree health benefits taken away after their employees had retired unless the company can demonstrate that compliance would cause substantial business hardship, and
(3) establishing a federal loan guarantee program so that employers can take out low cost loans to help them restore retiree health benefits.
Q. What is the companies’ reaction to H.R. 1322?
A. The companies’ reaction to H.R. 1322 has been extremely negative. Their Washington lobbying organization, an operation known as the ERISA Industry Committee, or ERIC, has written Congress complaining that enactment of H.R. 1322 would force some companies out of business or cause others to drop their retiree health plans altogether. They seem to be claiming that unless the companies are allowed to take away a retiree’s health benefits after a person’s retirement that such health benefits will become too expensive for them to afford.
However, Congressman Tierney, the chief sponsor of H.R. 1322, has replied to ERIC (click on
for the texts of the ERIC
and Tierney letters), and has pointed out that H.R. 1322 does not prevent companies from either changing their health plans anyway they want before an employee retires or from placing monetary ceilings on the amount of retiree health benefits they are willing to provide.
Thus, industry has greatly exaggerated their costs of complying with H.R. 1322 because they can completely control the amount they wish to spend on retiree health by deciding before an employee retires what amount of health benefits that employee is entitled to get. It follows that there is no justification for an employer to withdraw retiree health benefits after an employee retires when the employer
could have set monetary ceilings on those benefits and when such monetary ceilings were not exceeded..
Q.
Why are the companies so hostile to H.R. 1322?
A. It appears that they are desperate to divert attention from the fact that during the same period that they were slashing retiree health benefits they were also earning unprecedented profits and holding on to pension plans with billions of dollars in surplus assets which they could have used to help absorb any supposed increase in retiree health costs or to provide cost-of-living increases to help their retirees cope with reductions in their health benefits.
The companies did neither but instead used the combination of pension surpluses and retiree health cutbacks to artificially fatten their bottom lines and provide seven-figure increases in compensation and bonuses
to their senior executives.
Q.. What have the big retiree organizations like AARP been doing on this legislation?
A. Very little. In fact, although stating that they have yet to take an official position on H.R. 1322, AARP has more or less adopted the companies’ view that H.R. 1322 could force them to abandon retiree health programs or lead to diminished benefits for future retirees. Of course, this is the very argument that the companies made against the recent Senate-passed HMO reform bill without much success.
Moreover, existing federal law prevents a company from reducing or taking away a retiree’s pension and it is universally agreed that that provision has had no impact on a company’s decision to start or keep a pension plan. Why should it be any different for health?
We think AARP has taken a wrong turn on this subject and needs to reflect further on the terrible hardship and sense of betrayal experienced by many retirees, especially the elderly and the Medicare eligible, who have been receiving health benefits from their former employers suddenly to find the rug pulled out from under them.
There is something very suspicious and positively un-American about the idea that the only way employers can agree to provide retiree health benefits is if they retain the absolute right to renege on their commitments at any time and under any circumstances.
Q..
What can I do to protect myself and my family against having my company health benefits taken away after retirement?
A. There are three important steps that you and your loved ones can take.
First, urge your Congressional representatives to endorse H.R. 1322 and support its early enactment. Make sure they understand that you are aware of the business opposition to the bill and that you are not buying it.
Second, contact all your local senior citizens groups and AARP. Acquaint them with your concerns about retiree health and ask for their help in building support for H.R. 1322. Write or contact AARP and urge the organization to reexamine its lack of support for H.R. 1322. Again, make it clear that you are familiar with the business opposition to H.R. 1322 and that it doesn’t add up.
If you are an AARP member indicate that you are both disappointed that AARP is not providing better leadership on the issues that H.R. 1322 addresses and disturbed over their unbalanced treatment of the bill.
Third, contact your state and local officials and the community organizations that are compelled to assume significant economic and social burdens when retiree health benefits are reduced or cancelled. Once they understand what H.R. 1322 seeks to accomplish, they will realize that it is in their interest to endorse H.R. 1322.
Q. Does H.R. 1322 conflict with the efforts to add a prescription drug benefit to Medicare?
A. It does not. This is another aspect of an industry disinformation campaign that is being waged against H.R. 1322. Its premise is that the rising cost of prescription drugs is the main reason why employers take away retiree health benefits and if those costs are transferred to Medicare H.R. 1322 will be unnecessary. However, many diseases are not treatable by drugs (or not completely treatable). To permit employers to cut-off access to non-drug therapies is like robbing Peter to pay Paul.
Also, if it is true that prescription drugs are the biggest reason why employers renege on their retiree health commitments then it follows that if they are relieved of their
obligations to cover such costs H.R. 1322 becomes more affordable and there is no excuse for them to break their other promises. In addition, adding prescription drug coverage to Medicare will not help non-Medicare eligible retirees who will still be counting on their former employers to continue the benefits they were entitled to receive when they retired.
Don’t be fooled by this argument; it’s sole purpose is to "divide and conquer" by making retirees seeking improved prescription drug coverage fight with retirees seeking the protections of H.R. 1322. In fact, both proposals are completely compatible and deserve united retiree support.
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National Retiree Legislative Network
Last modified:
January 31, 2008
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