<nobr>Sep 18, 2002</nobr>

ERIC to Wellstone: Legislation Will Contribute to Impending Retiree Health Crisis

WASHINGTON, DC - The ERISA Industry Committee (ERIC) today sharply criticized legislation (S.2904) offered by Sen. Paul Wellstone that will significantly contribute to the imminent retiree health care crisis facing employers and employees. The legislation was introduced on the heels of a major study issued by Watson Wyatt Worldwide that finds employers likely to cut retiree health benefits due in part to federal regulations, escalating health care costs, and unhelpful government policies. All of these problems are exacerbated by the Wellstone proposal, said Mark J. Ugoretz, President of ERIC.

The "Emergency Retiree Health Benefits Protection Act," the Senate equivalent of H.R.1322, prohibits employers from canceling, decreasing or limiting the amount, type, level, or form of any benefit or option provided in their plan to retirees. The bill also prohibits increased out-of-pocket costs or modifications to the manner by which medical services are delivered under benefit plans so that a retiree has less ready access to the delivery of any such medical services.

"Both pieces of legislation create a strong disincentive to continue providing retiree health coverage and has a chilling effect on sponsorship of many other benefits," said Ugoretz. "Any steps Congress takes toward enactment of such legislation will precipitate the reduction, if not abandonment, of retiree health coverage by a significant proportion of the employers who offer such coverage to current or future retirees."

The Wellstone bill is retroactive and would force employers who sponsor retiree medical benefit plans to give certain retirees the option to undo post-retirement changes to their retiree medical plans, regardless of whether those changes occurred before the legislation was enacted.

ERIC warns that employers will voluntarily offer retiree health care coverage to employees only if they have the flexibility to modify, reduce or terminate such coverage when changing economics or altered business conditions necessitate they do so. "If employers are only permitted to offer retiree health coverage if they make an irrevocable commitment to continue offering coverage regardless of changed circumstances they will not offer coverage at all," said Ugoretz.

The ERISA Industry Committee (ERIC) is a non-profit association committed to the advancement of employee retirement, health, and welfare benefit plans of America's largest employers and represents exclusively the employee benefits interests of major employers. ERIC's members provide comprehensive retirement, health care coverage and other economic security benefits directly to some 25 million active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Media Contact: Doug Baj, Director, Communications, ERISA Industry Committee, (202) 789-1400,dbaj@eric.org.

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