Early-Retiree Insurance: a Broken Bridge?

69 Florida organizations sign up for federal program, but a congressman questions viability, fairness
By: Kenric Ward | Posted: September 1, 2010 4:05 PM
Old Couple

Credit: Yuri Arcurs - Shutterstock

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 Act’s 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 largely unreported," said Posey, R-Cocoa.

Posey added, "Nowhere in today’s 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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