Archive for the ‘Retirement’ Category

The “healthy retiree” bias just became stronger

The “healthy retiree” bias runs thus – particularly in the US: if you’re healthy, you’re more likely to retire; if you are not healthy, you are more likely to need employer-provided medical insurance, so you are less likely to retire (Michael Moore’s Sicko had at least one such example). This is, necessarily, confounded by income (i.e. if you can afford to self-insure, the problem goes away, but health and wealth are concordant goods).

So to the news! They are discussing, over at the Wall Street Journal, the ruling, by the Equal Employment Opportunity Commission, that employer synchronisation of retiree health benefits with Medicare is not unjust discrimination according to age:

Employers who provide retiree health benefits generally “coordinate” those benefits with Medicare by supplementing the government healthcare or by offering retirees a “bridge” benefit to cover health expenses after employees retire until they become Medicare-eligible. Until the 2000 interpretation, employers believed that the ADEA permitted them to coordinate any retiree health benefits they provided with Medicare without having to ensure that the benefits received by Medicare-eligible retirees were the same as those received by younger retirees.

To correct the problem, the new regulation provides an exemption for ADEA coverage for this common and longstanding employer practice. The Commission voted to approve this regulation on April 22, 2004, but the AARP sued the EEOC in early 2005 to prevent its publication. After several years of litigation, the EEOC emerged victorious as the Third Circuit Court of Appeals found that the rule was “a reasonable, necessary and proper exercise of [EEOC’s] authority.”

EEOC Legal Counsel Reed Russell said, “Our rule makes clear that it is lawful for employers to continue to provide retirees with the health benefits they currently receive. Contrary to what some interest groups have erroneously asserted, the rule will not require any cuts to retiree benefits.”

I imagine the rule will not – it will, however, allow those cuts, as well as allowing more (or all of any new) money to flow to new retirees – read Baby Boomers. Is this age-discrimination? Yes – and the EEOC as much as admits it. Over at the WSJ:

The U.S. Court of Appeals for the Third Circuit found in favor of the federal government. But, the court added, “we recognize with some dismay that the proposed exemption may allow employers to reduce health benefits to retirees over the age of 65 while maintaining greater benefits for younger retirees.”

Although one can (and no doubt several did) make the argument that, as far as equity goes, there’s no reason why two discrete(ish) sets of retirees should receive equal compensation, when the Boomer set probably contributed more, while they worked.

So why exclude this practice from coverage of the Age Discrimination in Employment Act (ADEA)? Because if the complaint was upheld the employers would probably have dropped the whole thing for everyone, where they could. Does the Federal government want a world in which Boomers retire, with only the Federal government to pay for their care? Of course not. They’d have to put our tax dollars to some kind of practical use in terms of American human and social capital. Can’t have that.

Once again, though, we see more patchwork palliatives for the actual problem – escalating health care costs. I’m sure messing about with the COBRA laws is next.

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