Study: Retiree Health Care Suffering From Cutbacks

November 20, 2002 ( - Retiree health-care benefits didn't get much of a boost during the boom 1990s and should erode increasingly quickly in years to come, a new study found.

According to a report in the November/December issue of the journal Health Affairs, more employers are expected to scale back or drop medical coverage for retirees with healthcare costs on the upswing, according to a Reuters report.

The percentage of large employers offering benefits to either early- or Medicare-eligible retirees slipped from 46% in 1991 to 34% in 2001, the study found.

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Some employers told the study’s researchers they no longer offer retiree health benefits to new employees or current employers who have yet to retire.

“A more troubling finding is that 9% of large firms reported that in the next two years they are very or somewhat likely to eliminate retiree health benefits for new employees or current employees who have not yet retired, and 6% are somewhat likely to eliminate retiree health benefits entirely,” researchers wrote.

Half (51%) of large firms also plan to increase cost-sharing for prescription drug benefits and 32% are likely to roll out a three-tier cost-sharing formula, the study found.

Researchers from RTI International of Research Triangle Park, North Carolina, and the Health Research and Educational Trust (HRET) in Washington, DC, examined coverage trends using data drawn from Henry J. Kaiser Family Foundation/HRET surveys of human resource and benefit managers.

The team also conducted in-depth interviews with 25 “key informants,” including employers, unions, benefits consultants, and a large insurer.