Whenever I speak with leaders from the business community from all around the country, they all agree on one thing: rising health care costs are making it harder for workers and retirees to get the benefits they deserve. Increasingly, employers are being forced to choose between staying competitive and honoring the men and women who powered their businesses by providing their retirees with quality benefits.
Americans who retire before they turn 65 and are eligible for Medicare are particularly vulnerable. In 1988, 66 percent of large firms provided health care coverage to their retirees. 20 years later in 2008, the percent of firms offering coverage to retirees plummeted to 31 percent. The lack of coverage from their employer forces many retirees to pay exorbitant premiums or simply go without health insurance.
Fortunately for these Americans, the Affordable Care Act will provide immediate relief. The new law includes $5 billion in financial assistance for employer health plans that offer coverage to early retirees. This program is temporary and will help bridge the gap until 2014 when health insurance exchanges make it easier for all Americans to access affordable health coverage. Between now and then, this program will provide premium relief for employers, making it easier to give their retirees high-quality, affordable medical coverage.
Employers know this program will help them cover their retirees. Today, John J. Castellani, President of the Business Roundtable said:
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.
We’re moving quickly to implement this provision in the new law. Today, President Obama announced the release of new regulations for this program. You can read the regulations here. In June, businesses, unions and state and local governments can begin applying to participate. To learn more about this important effort, check out the fact sheet we issued today.
Thanks to the Affordable Care Act, we are lowering costs for businesses, and ensuring more Americans have the affordable, quality care they need and deserve.
Valerie Jarrett is Senior Advisor to the President.