Fox Falsely Suggests Early Retiree Reinsurance Program Doesn't Benefit For-Profit Employers

Clayton Morris: “The Federal Government Has Been Reimbursing States And Unions.” During the April 2 edition of Fox News' Fox & Friends Saturday, on-screen text mentioned that the Early Retiree Reinsurance Program (ERRP) provides funds to “states, unions & companies” but co-host Clayton Morris said only that the program “has been reimbursing states and unions to the tune of $1.8 billion”:

MORRIS: It seems every month we learn more and more what's in this health care law and this morning we're learning that the federal government has been reimbursing states and unions to the tune of $1.8 billion that we've already paid out. Is this anything other than a bailout? [Fox News, Fox & Friends Saturday, 4/2/11]

Mike Huckabee Said The Program Provides “Just Under $2 Billion Of Taxpayer Money To Prop Up Unions So They'll Be Politically Strong.” From the April 2 edition of Fox News' Fox & Friends Saturday:

HUCKABEE: This is not a bailout. This is a payoff. Let's get blunt, this is political favoritism. Why the unions? Why not small business owners? Why not some guy running a dry cleaners store in a small community somewhere in Kansas? Because the unions are the backbone of the Democratic party's political muscle. And so what they're looking for is help us, prop us up. And just under $2 billion of taxpayer money to prop up unions so they'll be politically strong is as blatant and overt a political payoff as I've seen in long time.

DAVE BRIGGS (co-host): It's the Early Retirement Reinsurance Program. The United Auto Workers got a ton of money, by far the biggest recipient. [Fox News, Fox & Friends Saturday, 4/2/11]

In Fact, Private Companies Received Assistance From The Program

ERRP Designed To Encourage Health Plan Sponsors To Continue Offering Health Benefits For Early Retirees. From a March 31 report on ERRP, which was created by the Affordable Care Act:

People in the early retiree age group (i.e., ages 55 to 64) often face difficulties obtaining insurance in the individual market because of age or chronic conditions that make coverage unaffordable or inaccessible. The availability of group health insurance coverage for America's retirees age 55 to 64 has declined significantly over the past 20 years, as the percentage of large firms providing workers with retirement health coverage has dropped from 66 percent to 28 percent. The ERRP was designed to stabilize this market by providing financial assistance to health plan sponsors that make coverage available to millions of early retirees and their families -- including for-profit companies, schools and educational institutions, unions, State and local governments, religious organizations and other non-profit plan sponsors. The ERRP assists both early retirees, and any active workers covered under the same plan, by reimbursing participating plan sponsors that offer such benefits for a portion of the costs of providing health coverage to retirees age 55 to 64 and their families. ERRP subsidizes 80 percent of the actual cost of certain health expenses paid by the plan or by an early retiree or his/her enrolled spouse, surviving spouse, or dependent between a cost threshold ($15,000) and cost limit ($90,000). Costs reimbursed by ERRP include medical, surgical, hospital, behavioral health, prescription drug, and other benefits similar to those covered by Medicare. [Cciio.cms.gov, 3/31/11, emphasis added]

Commercial Organizations Made Up Larger Percentage Of Approved Participants Than Unions. A March 2 report states that "[a]s of December 31, 2010, over 5,000 plan sponsors were approved for participation in ERRP" and that “state and local governments represent the majority of approved ERRP sponsors, followed by commercial organizations.” [Healthcare.gov, 3/2/11]

The report includes the following chart:

“All Qualified Applications” For ERRP “Will Be Approved” And “Will Be Processed In The Order In Which They Are Received.” From the Early Retiree Reinsurance Program website:

Are Applications being accepted on a first-come, first-serve basis?

ANSWER: For the Early Retiree Reinsurance Program, it's important to make the distinction between the application process and the claims process, which operate separately.

All qualified applications will be approved. Applications will be processed in the order in which they are received.

Reimbursements are made based on when claims are submitted, not when the employers' applications for the program were submitted. All employers who are accepted into the Early Retiree Reinsurance Program are eligible to receive reimbursement for costs incurred on or after June 1st, regardless of the date on which the employer was accepted into the program. Once an employer is accepted into the program, they can submit claims for their retirees and these claims will be processed in the order in which they are received. [Errp.gov, 8/9/10]

Business Roundtable Praised ERRP. In May 2010, Business Roundtable, “an association of chief executive officers of leading U.S. companies,” issued the following statement:

“From the beginning, Business Roundtable has championed efforts to ensure employers can continue to offer quality, affordable health plans to their employees. Today, the Obama Administration has recognized the commitment of the companies that offer retiree health coverage. The Early Retiree Reinsurance Program makes health benefits more affordable for employers and early retirees and their families.

”While health care costs are the number one cost pressure facing our members, we are committed to providing coverage to our more than 35 million employees, retirees and their families. The Early Retiree Reinsurance Program reduces costs and allows many of our member companies to continue providing this critical coverage," said John J. Castellani, President of Business Roundtable. [Business Roundtable, 5/3/10]

Major U.S. Companies Recieved Funds From ERRP. Bloomberg reported on April 1:

Eight U.S. companies that earned more than $10 billion last year, led by AT&T Inc. (T), were among recipients of a government program that paid $1.8 billion toward elderly retirees' health-care costs, a report shows.

[...]

The list includes Citigroup Inc. (C), which received $1.8 million; JPMorgan Chase & Co. (JPM), at $2.9 million; International Business Machines Corp. (IBM), at $13 million; Johnson & Johnson (JNJ), at $2.5 million; General Electric Co. (GE), at $37 million; Intel Corp. (INTC), at $950,000; and Procter & Gamble Co. (PG), at $6.6 million.

Larsen said yesterday the government didn't limit which employers were eligible to apply for the fund.

“This program helps all companies to continue the retiree coverage they're offering today,” he said. [Bloomberg, 4/1/11]

ERRP Recipients Must Provide Insurance To Early Retirees, And Very Few Small Businesses Do

Huckabee: “Why The Unions? Why Not Small Business Owners?” During the Fox & Friends Saturday segment, Huckabee stated of ERRP: “Let's get blunt, this is political favoritism. Why the unions? Why not small business owners? Why not some guy running a dry cleaners store in a small community somewhere in Kansas?” [Fox News, Fox & Friends Saturday, 4/2/11]

Only Employers Who Have Group Health Plans With Early Retiree Benefits Qualified For Assistance. From to a Healthcare.gov report on the Early Retiree Reinsurance Program:

Eligibility Requirements

Employers and unions that maintain, either directly or through an insurer, an employment-based group health plan that provides health benefits to early retirees or the spouses, surviving spouses, and dependents of early retirees may participate in the ERRP. Sponsoring employers and unions that are accepted into the program can receive reinsurance reimbursement for a portion of the medical claims for health benefits, as specified by the Secretary, for early retirees age 55 and older who are not eligible for Medicare, and their spouses, surviving spouses, and dependents. [Healthcare.gov, 3/2/11, emphasis added]

Very Few Small Businesses Offer Retiree Health Benefits. The Kaiser Family Foundation's 2010 survey of employer health benefits shows that only 3 percent of small firms with health plans provide retiree benefits:

Retiree health benefits are an important consideration for older workers making decisions about their retirement. Health benefits for retirees also provide an important supplement to Medicare for retirees age 65 or older. Among firms offering health benefits to their workers, large firms (200 or more workers) are much more likely than small firms (3-199 workers) to offer retiree health benefits. After falling dramatically in the late 1980s and early 1990s, the percentage of large firms (200 or more workers) offering retiree health benefits has remained relatively constant.

Twenty-eight percent of large firms (200 or more workers) that offer health benefits to their employees offer retiree coverage in 2010, similar to 30% in 2009, but down from 34% in 2005 and 66% in 1988 (Exhibit 11.1).1

Offering retiree health benefits varies considerably by firm characteristics.

• Large firms are much more likely to offer retiree health benefits than small firms--28% vs. 3%.
• Among large firms that offer health benefits, state and local governments are more likely (87%) than large firms in other industries to offer retiree health benefits. [Kaiser Family Foundation, 9/2/10, emphasis added]

Health Affairs: “The Proportion Of Employers Offering Retiree Plans Has Been Dropping For More Than 20 Years.” From a November 2010 policy brief on early retiree insurance:

The proportion of employers offering retiree plans has been dropping for more than 20 years. Many of those who still offer coverage have curtailed benefits, tightened eligibility rules, or eliminated future coverage for newly hired workers. Most employers have increased the share of premiums that retirees pay. One-fifth of the largest employers give early retirees the right to buy coverage through the employer's plan, but make no contribution toward the cost. Among employers who are still paying part of the premium, more than half have adopted a “premium cap”--a fixed dollar limit on the amount the employer will contribute toward coverage. Once the cap has been reached, all future increases in the cost of coverage are borne entirely by the participants. [Healthaffairs.org, 11/23/10]