US Senate Committee on Health, Education, Labor, & Pensions

New GAO Report Shows 24 Companies Received Almost Half of Funding for Early Retiree Program

Enzi Calls for Funds to be Returned to Reduce Deficit

Monday, October 31, 2011Joe Brenckle 202-224-2465

WASHINGTON, D.C. – Senator Mike Enzi (R-Wyo.), Ranking Member on the Senate Health, Education, Labor and Pensions (HELP) Committee, said a new report released today by the Government Accountability Office (GAO), in conjunction with recently released data from HHS, shows that twenty-four companies received almost half of the funding for the Early Retiree Reinsurance Program created by the President’s new health care law. The intent of the program was to offset the cost of retiree health benefits for individuals over 55 but not yet eligible for Medicare. Five billion dollars was appropriated to carry out the program through 2014. As of October 2011, the program has paid out more than $2.9 billion.

“This report, as well as recently released data from HHS, indicates that the lion’s share of the funding for this program – nearly $1.5 billion – has gone to only 24 organizations,” said Senator Enzi.  “More than half of the funding went to government entities, including state employee retiree health plans.  And of the remaining funds, most of it went to union health plans.”

The GAO review of the program found that funds are expected to expire by September of 2012 due to lack of funding, even though the program was slated to run through 2014.  GAO’s findings show that most of the funding was directed to plans serving auto and state union workers.  The UAW Retiree Medical Benefits Trust received the largest reimbursement amount, with the top three entities who have received reimbursement – out of 2,049 total – receiving more than 16 percent. Additional studies, such as the October 2011 study from Towers Watson, found that more than half of all employers offering retiree health coverage have indicated that they plan to discontinue this coverage.

“Rather than rewarding politically connected constituencies, the remaining funds in the insurance program for early retirees should be used to assist employers with providing insurance coverage,” Senator Enzi said.  “If that proves impossible, the funds should be returned to the Treasury to reduce the federal deficit.”

You can read the new GAO report here.

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