Down to the last penny?

Health Care Reform legislation mandated temporary federal assistance to medical benefit plan sponsors toward the cost of their early retiree (i.e., pre-Medicare) benefits. Congress appropriated $5 billion of taxpayer money to fund this mandate, called the early retiree reinsurance program (ERRP). In the legislation ERRP was set to end no later than January 1, 2014 when the main provisions of health care reform kick in - - and thus is temporary.

It now appears ERRP is even more temporary than Congress imagined.

The Department of Health and Human Services released this report on ERRP May 13, 2011. [look under "Recent Changes"] The report shows that ERRP payments for requests submitted through March 31 and paid thru May 3 totaled almost $2.5 billion, or nearly half the total appropriation.

HHS notes in their report that, “due to the significant response among the employer community, the program ceased accepting applications on May 6, 2011.” Significant reponse is an understatement. But, remember, it was supposed to be temporary.

As it turns out - - very temporary.

Considering applications received after March 31 that are not yet reflected in the total ERRP payments, it’s clear that the money is running out much sooner than expected. It’s even possible plan sponsors whose applications were approved after March 31 will not be reimbursed for the full amount of their 2011 eligible expenses. And as for 2012, 2013? - - fugheddabouditt !

The HHS report lists the benefit plan sponsors that have received ERRP payments, and the amounts paid. There are 1,748 plan sponsors on the list. Of these, 16 (fewer than 1%) received a total of just over $1 billion (42% of all the payments). These 16 plan sponsors include 5 corporate plans (e.g., AT & T, Verizon) which were paid about $301 million; 2 union benefit trusts paid about $246 million; and 9 State employee retirement systems (e.g., Ohio, Kentucky) paid $485 million. The largest single recipient is the United Auto Workers Retiree Medical Benefits Trust which, according to the HHS report, was paid $220,717,012.70.

Your tax dollars at work - - right down to the last penny.

On the other hand, ERRP is a metaphor for the health reform legislation of which it is a part: big on promise, inadequate on delivery, and grossly unprepared for the actual demand.