Retirees With Company Health Plans on Decline

New government statistics show that the number of retired Americans covered by corporate health plans is declining dramatically, leaving an increasing proportion of retirees solely dependent on Medicare, Labor Secretary Robert B. Reich said Thursday.

The percentage of retirees 55 and older who receive employer-sponsored health care benefits fell from 44% in 1988 to 34% last year, according to a Labor Department analysis of Census Bureau data. Many retired Americans have opted to drop corporate coverage because of rising premiums, with the median annual premium paid by retirees increasing in inflation-adjusted dollars from $874 in 1988 to $960 in 1994.

“After three decades of improving retirement security we are reversing direction,” Reich said, warning that Republican plans to raise Medicare premiums will put an added financial burden on already strapped retirees.

Reich and key Democratic senators said that the specter of higher health care costs comes at a time when many of the nation’s elderly already are struggling to make ends meet.

The Labor Department study found that 60% of retirees over the age of 65 receive less than $10,000 per year in combined Social Security and private pension benefits. About 56% of the nation’s 13.2 million retirees 65 and older receive no pension income other than Social Security, the report said.

Senate Minority Leader Tom Daschle (D-S.D.) cited the numbers as evidence that Republican plans to reduce spending on Medicare by $270 billion over seven years will take money “right out of the pockets of people who have no other source of revenue.”

The study is based on a Census Bureau survey of about 57,000 households in September, 1994.

Citing the report, Sen. Edward M. Kennedy (D-Mass.) accused Republicans of stealing from the elderly to help pay for $245 billion in proposed tax cuts for affluent Americans. “Republicans continue to pretend that their plan is about family values,” he said. “But theft is not a family value.”

The Labor Department study also calls attention to a significant shift away from traditional annuity arrangements in which retirees receive monthly payments for life and toward one-time payments upon retirement. Reich said that more pensioned retirees are receiving lump-sum payments than annuities.

Kennedy and Reich criticized a proposal, endorsed Tuesday by the House Ways and Means Committee, that would make it easier for companies to withdraw excess assets from employee pension funds.

“We saw these abuses in the ‘80s, when more than 2,000 pension plans were terminated to finance takeovers and stock market manipulations and to enrich the wealthy few at the expense of the hard-working many,” Kennedy said.