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Access to Adequate Health Insurance: How Does the Equal Employment Opportunity Commission's Recent Rule Affect Retiree Health

The record is also devoid of anything that would lead one to conclude the rule will have the desired, or required, effects. It certainly won't further the non-discrimination goals of the ADEA. It certainly won't protect the retiree health benefits of people as they age. There is no empirical evidence that employers will be encouraged to provide retiree health benefits to any retirees if the rule takes effect. Even those writing in support of the rule make no promises to provide, or continue to provide, retiree health benefits to younger retirees.

Indeed, had the Commission bothered to look, it would have found ample evidence to suggest that eliminating retiree health benefits for older retirees is often just one step towards eliminating it for all retirees. This is exactly what happened to an AARP member in Louisiana who worked for a predecessor company of International Minerals and Chemicals Global corporation. As of January 1, 2004, IMC Global ceased providing retiree health benefits to retirees above age 65. And, any employee under age 50 as of April 2003 will not get retiree health benefits upon retirement.

The EEOC says that this rule protects everyone's health benefits. But, it is clear that this rule does not protect the benefits of older retirees. More than 12 million Medicare beneficiaries currently receive some form of health benefits from their former employers. The EEOC did not try to assess how many people will lose their employer-provided supplemental benefits, where or whether they will find alternative benefits, or how they will afford those benefits. The record has no assessment of how the insurance industry will adapt, if at all, to the needs of this potential influx of private beneficiaries. Nor does the record address what will happen to the great number of older retirees who are disabled or have pre-existing medical conditions that may disqualify them from any - or any affordable - private Medigap policy. Perhaps the most glaring omission in the record is EEOC's failure to assess how the improvements made to Medicare - including the tens of billions of dollars of direct subsidies to employers - made by the Medicare prescription drug law will affect employer practices. In fact, the new law benefits employers regardless of whether they qualify for the financial subsidies provided by Congress. The addition of a prescription drug benefit to Medicare correspondingly, and substantially, reduces an employer's cost for a supplemental health benefit for older retirees.

Congress was seeking ways to KEEP employers in the retiree health system, not ways to make it easier for them to exit that system. The EEOC rule obviously does the latter.

The lack of evidence in the record is especially troubling because this rule represents an abrupt about-face from the EEOC's position on the same issue only four years ago. In its brief to the 3rd Circuit in the Erie County case, the Commission stated:

Health insurance benefits can be a costly employee benefit. Employers should not have their hands tied in their efforts to maximize the benefits for all employees, current and former. The answer to this conundrum, however, is not to arbitrarily exclude a group of individuals from the protection of the statute. The answer is for the employer either to rely upon distinctions that are not age-based or to structure any age-based distinctions in a manner that comports with the ADEA . . . There is hardly any discussion in the record of either the real reasons employers have been leaving the retiree health system or the real costs associated with providing these benefits to older retirees - and then eliminating them.

The paucity of support for the EEOC's position is highlighted by even a cursory look at the recent history in this area. It is clear that the decade-long decline in retiree health benefits has nothing whatsoever to do with the ADEA and its requirement that an employer provide these benefits in a fair and non-discriminatory manner. Retiree health benefits were declining for many years prior to the Erie County decision in 2000, for reasons having nothing to do with the ADEA.

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