GOP ‘Uncovers’ And Attacks Widely Known Program For Early-Retirees In Health Law

Yesterday, the Republicans on the Energy and Commerce Committee issued a press release (and this analysis) in which they claimed to have discovered “a $5 billion bailout fund for state governments, Fortune 500 companies, and Hollywood unions”:

So what is this mysterious $5 billion bailout? Known as the Early Retiree Reinsurance Program, it provides federal dollars to employers and unions that provide health coverage to early retirees. Like many provisions and accounting gimmicks in the health care law, it has largely escaped public scrutiny because of the sheer volume of programs and spending crammed into the law without scrutiny or Congressional oversight.

“Escaped public scrutiny” is an exaggeration to say the least. The program was so secretive that it was extensively covered by the press and regularly touted by Democrats as an example of how the Affordable Care Act would help businesses struggling with growing health care spending and prevent companies from dropping early retiree coverage (seniors 55-64 years old who are not yet eligible for Medicare) before the exchanges begin in 2014. Consider:

– NYT headline: Bristling at Health Plan to Cover Early Retirees [9/9/2009]

– NYT: “Reinsurance program for early retirees Both the House and Senate bills would provide federal financing for a new reinsurance program to encourage employers to maintain health benefits for employees and early retirees age 55 to 64.” [12/28/2009]

– The Hill headline: “HHS begins accepting applications for early retiree reinsurance program” [6/29/2010]

– Rep. Carolyn Maloney (D-NY)’s fact sheet: “The Early Retiree Reinsurance Program provides much-needed financial relief for employers, unions and state and local governments so retirees can get quality, affordable insurance. [2010]

Many different businesses and state governments have benefited from the provision, including the Koch brothers, who applied for federal funding despite spending millions of dollars trying to repeal reform. The provision also resembles one passed by Republicans in 2003, which gave subsidies to employers who offered drug coverage to their retirees before the Medicare Part D program went into effect in 2006. As the New York Times explained, the goal then was the same as it is with the early retiree grants today, “to discourage those employers from terminating those programs, which would have saddled the government and seniors with higher costs.”

Some states have adopted similar programs. In 2010, for instance, Minnesota Gov. Tim Pawlenty (R-MN) extended early retirement benefits to state workers.