New Bills Seek to Solve Steel Benefits Issue

April 16, 2002 ( - Faced with a faltering steel industry, lawmakers are drafting legislation proposals aimed at financing the costs of health insurance for steel workers and retirees.

An aide in Senator John Rockefeller’s (D-West Virginia) office told that he plans to introduce a bill that will address the beleaguered industry’s legacy health costs and will include a death benefit for steel workers, however it will not touch on pension liabilities.

Representative Phil English (D-Pennsylvania), chairman of the Congressional Steel Caucus, is also expected to introduce legislation to address the issue. Although an aide declined to give details, she did say that a new bill is due out this week.

At the same time, Representative Peter Visclosky (D- Indiana), who serves as vice president on the Steel Caucus, has authored the United Steelworkers Revitalization Act of 2001 (H.R. 808), a draft bill, which seeks to help the industry back onto its feet. The bill is yet to gain meaningful support in Congress.


The bills come at a time when the steel industry is facing its greatest challenges. LTV Corp., one of the first steel companies to file for bankruptcy, announced that it would be cutting pensions and eliminating benefits for its retirees as part of its efforts to return to profitability.

According to the United Steelworkers of America, at the end of 1999, the steel industry’s retiree health care benefit obligations totaled an estimated $13 billion.  Annually, health care benefits for 600,000 retired steelworkers, surviving spouses, and dependents can cost domestic steel producers an estimated $965 million or $9 per ton of steel shipped. 

The average steel company has approximately three retirees for every active employee – nearly three times the ratio for most other major basic manufacturing companies.

While the Pension Benefits Guaranty Corporation (PBGC) can alleviate some of this burden by taking over pension plans, steel companies are left to figure out how to shoulder health benefits.

Even more injurious, steel companies cannot depend on Medicare to pick up their health bill tabs-many steel workers do not qualify because they have not reached age 65.


The Bush Administration has made some attempts to help out. Besides proposing a discount card for individuals who qualify for Medicare, the administration has proposed offering tax credits to help the uninsured.  Under this proposal, a refundable tax credit of $1,000 to $3,000, depending on family size, would be made available to individuals without employer-provided health insurance. 

However, steel advocates say this amount is too small given the surge in health costs, which, a recent report from the Centers for Medicare and Medicaid Services, shows are expected to grow at a rate of 7.3% annually until 2011. 

Meanwhile, President Bush has made good on his promise to aid the Steel industry. Recently he approved imposed tariffs of up to 30% on imported steel under section 201 of the US Steel Trade Act of 1974.