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Mr. KERRY. Mr. President, today I am introducing the Retiree Health Coverage Protection Act to provide an additional $5 billion for the Early Retiree Reinsurance Program, EERP, to allow more employers to participate in the program. It will also further reduce the cost of retiree coverage.
I worked with Sen. Stabenow to include the EERP program in the Affordable Care Act due to the erosion of employer-sponsored retiree coverage across the country. The percentage of large firms providing workers with retiree health coverage dropped from 66 percent in 1988 to 29 percent in 2009.
The ERRP helps to control health care costs and preserve coverage for early retirees and their families and has been remarkably successful in making retiree health insurance coverage more stable and affordable.
Employers who participate in the program can receive a reinsurance reimbursement of up to 80 percent of catastrophic medical claims between $15,000 and $90,000 for their early retiree enrollees. The reimbursement is used to reduce the employer's health care costs and to lower premiums to retirees and their families. A study from Hewitt Associates estimates that the program will reduce the cost of retiree coverage from 25 to 35 percent, anywhere from $2,000 to $3,000 per retiree, per year.
The program has garnered robust participation among a wide range of retiree health plan sponsors from all major sectors of our economy. Earlier this month, it was announced that 5,515 plan sponsors have been approved to participate in the program and nearly $2.5 billion reinsurance reimbursements have been paid to 1,728 participating retiree plans.
The ERRP has been so successful that the Centers for Medicare and Medicaid Services, CMS, announced it could no longer accept applications for the program after May 6 because the overwhelming response would exhaust the $5 billion in appropriated program funding. Until additional insurance market reforms are enacted in 2014, we should build on the demonstrated success of ERRP.
Senator Stabenow, Senator Blumenthal, and I are working together to preserve insurance coverage for millions of retirees who rely on on health coverage through their former employers before they become eligible for Medicare. That is why we are introducing legislation, the Retiree Health Coverage Protection Act, to provide an additional $5 billion in ERRP funding. This additional funding could be used to allow more employers to participate in the program and to further reduce the cost of retiree coverage.
Over 180 employers who offer retiree health benefits in Massachusetts have taken advantage of this program. These public and private sector employers in the Commonwealth represent various entities, including: city governments, hospitals, colleges, and financial service institutions.
I would like to thank a number of organizations who have been integral to the development of the Retiree Health Coverage Protection Act and who have endorsed our legislation today, including the American Federation of Labor and Congress of Industrial Organizations, AFL-CIO, the Alliance for Retired Americans, the American Federation of State, County, and Municipal Employees, AFSCME, Families USA, the International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, UAW, and the National Education Association, NEA.
I look forward to working with my colleagues in the Senate to protect and stabilize retiree health coverage by ensuring the ERRP has adequate funding. I ask my colleagues to cosponsor this important legislation.
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