Retiree plan shows health act benefits

Thousands of early retirees who would either have to pay exorbitantly for individual health insurance policies or live without insurance and the fear that they might get sick before becoming old enough for Medicare will now be able to receive coverage through their former employers or unions.

The Early Retiree Reinsurance Program was part of the health care reform bill bitterly debated and eventually passed by Congress. It is the latest example that the health care legislation provides realistic help to citizens in need.

The program's intent is to reverse an alarming trend. The percentage of firms providing workers with retiree health coverage dropped from 66 percent in 1988 to 29 percent in 2009. The reason is cost, and more particularly the effect that those few retired employees with chronic health conditions have on the cost of premiums for all. Companies could not afford them.

This has had two negative impacts. Americans retiring before becoming eligible for Medicare could see life savings wiped out by unexpected medical bills or from paying excessive rates. It also hindered the normal elasticity of the U.S. work force, leaving employees reluctant to retire early, or for employers to offer early retirement, making it harder for younger workers to get jobs.

The new program will cover 80 percent of medical claims for an individual's health benefits between $15,000 and $90,000. By providing employers relief from these few high-cost claims, health benefit plans for early retirees become affordable. Retirees ages 55 to 64 are eligible. Claims qualifying for payments are for services covered by Medicare.

The program is open to businesses, state and local governments, unions and nonprofits. This week the U.S. Department of Health and Human Services announced the first round of applicants accepted into the program, numbering nearly 2,000 (full disclosure - HHS approved The Day Publishing Co.'s application to participate).

It is generating much interest, with applications received from more than 50 percent of Fortune 500 companies, all major unions and government entities in every state.

The program continues through 2013, when early retirees and their families, along with others, will be able to choose from a range of coverage options available in new, competitive private health insurance exchanges.

Congress set aside $5 billion for the life of the program, about the cost of an aircraft carrier. That investment will reduce the cost to hospitals of caring for the uninsured, leave more money for consumer buying that would otherwise go to pay high premiums and medical costs, and generate jobs to fill vacancies from early retirements.

This is not the socialized health care critics decried, but the kind of practical public-private partnership necessary to meet health care needs.