Wednesday, November 26, 2003

So the prescription-drug bill has incentives that are going to prevent employers from dropping their own drug coverage for retirees, right? Er, maybe not, says The New York Times:

The Congressional Budget Office estimates that 23 percent of employees — or 2.7 million people — who are now receiving drug benefits from their employers will lose those benefits after the Medicare drug program is instituted in 2006.

Richard Evans, an analyst with Bernstein Research, said that most employers would view the Medicare legislation as a heaven-sent opportunity to reduce expenses. The legislation offers employers tax incentives to continue paying for retiree health expenses that amount to 28 percent of drug costs, from $250 to $5,000 a retiree a year. But Mr. Evans estimated that employers would save, on average, $1,000 a retiree if they refused the tax incentives and dropped coverage.

"So the companies are going to put them into the Medicare program," Mr. Evans said. "That means a lot of retirees with great drug coverage now will get worse coverage in the future."

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