Giving retirees their due...

From John Curry, January 6, 2009

Give retirees their due

Older Americans' health care benefits aren't a 'legacy,' they were earned — and should be honored

baltimoresun.com
By C. William Jones
January 6, 2009

As the U.S. economy continues its meltdown, it is unthinkable that the retirees who fought wars and built our nation through decades of labor, earning post-employment pensions and medical benefits, are among those being faulted for America's economic problems.

Lately, economists, talk-show hosts, journalists and even politicians have been echoing the corporate-speak by tagging baby boomers and retirees' earned pensions and health benefits as "legacy costs" dragging our nation down.

The Miriam-Webster dictionary defines legacy as a "gift by will, especially of money or other personal property; bequest; something transmitted or received from an ancestor or predecessor."

But benefits received by corporate and municipal retirees such as health insurance coverage and pensions aren't gifts, bequests or something inherited. These were earned by employees during their working years in exchange for accepting lower wages and/or fewer paid days off. To suggest that this deferred compensation is a legacy benefit - or the real reason for a faltering American economy - is nonsense.

Federal law protects retirees from having their earned and promised pensions cut after retirement. Earned and promised health care benefits deserve the same protections.

Why? Because, over many years, companies used the promise of post-employment health care coverage to induce many employees to stay with that employer or, in some cases, used that promise to induce them to take early retirement. Companies did not agree to pay retiree benefits out of the goodness of their hearts or social well-being; there were significant financial benefits and tax breaks for them. Employers didn't have to pay Social Security and payroll taxes on these benefits.

Funding these benefits could be deferred by companies in years when earnings were low, unlike payroll that must be paid on time. Since pensions are based on a percentage of wages, companies also saved on long-term pension costs.

The responsible course would have been for employers to set aside those funds to pay for the future benefits that they knew were earned by employees, and that they as employers had a fiduciary responsibility to pay. Instead, corporations shoveled billions in bonuses and incentives into CEOs' pockets and now are using tough economic times as an excuse to run away from their financial commitments, figuring the American taxpayer will pick up the tab.

What happens to the estimated 18.5 million American retirees who have experienced cutbacks or the elimination of their earned health care benefits?

A bipartisan proposal to be considered by the 111th Congress, the Emergency Retiree Health Benefits Protection Act, would prohibit employers from making post-retirement cancellations or reductions of health benefits that retirees were entitled to. Companies would be required to live up to the financial commitments made to their employees and retirees, without placing mandates on the employers as to what health plans they provide or monetary ceilings on the amount of health benefits.

It's simple, really. If a company makes a commitment to provide health care, it has an obligation to fund that commitment. After all, the company has other ways to increase revenue or cut expenses; the retiree does not.

Moreover, many retirees, while too young for Medicare, are too old for a realistic shot at the vanishing number of jobs with decent benefits. Individual health care insurance policies are prohibitively expensive. Medicare alone isn't enough to cover all health care needs, and supplemental policies are a financial burden for someone on a fixed income.

Wall Street, banks and automakers got their bailout; now others are lined up to feed at the trough. Retirees, our children and our grandchildren will be left with the tab, all while being forced onto an already overburdened government health care system.

Taxpayers and retirees are likely to be harmed once again - unless our elected officials take action and consider true protection for American retirees.

C. William Jones is the chairman of ProtectSeniors.org, a retiree and a resident of Easton. His e-mail is cwilliam@goeaston.net.