NEWS RELEASE and MEDIA BRIEFING
December 10, 1:30 p.m. ET
December 10, 2009
PR-09/44
For additional information:
Jason Hammersla:
Office: 202-289-6700
Employers, organized labor tell Reid: taxation of Medicare drug subsidy will threaten retiree health programs
Council, AFL-CIO urge elimination of provision from Senate bill, host media briefing with former CMS administrator Tom Scully
Letter Embargoed until 1:30 p.m. Eastern Time, December 10, 2009
On Thursday, December 10, the American Benefits Council and the AFL-CIO sent a letter [embargoed until 1:30 p.m. ET, 12/10/09] to Senate Majority Leader Harry Reid urging the elimination of a little-discussed but potentially harmful provision in the Senate health care reform bill. As currently crafted, the Patient Protection and Affordable Care Act (H.R. 3590) would impose a new tax on prescription drug subsidies for Medicare-eligible seniors.
In a conference call briefing for the media at 1:30 p.m. Eastern Time, Council President James A. Klein and AFL-CIO Assistant to the President Gerald Shea will explain the catastrophic effect this provision could have on employers, workers, the Medicare program and American financial markets. Tom Scully, former administrator of the Centers for Medicare and Medicaid Services, who wrote an op-ed in the December 7 Wall Street Journal criticizing the provision, will also be present at the media briefing.
Click here to RSVP and for call-in information.
The provision reverses a policy of the Medicare Modernization Act by taxing the 28 percent subsidy that employers receive for providing drug coverage for retirees. Congress enacted the policy in 2003 to allow employers to maintain such coverage and to save the government money. Now the policy is to be reversed, which undoubtedly will destabilize this vital coverage and impose more costs on the federal government.
The Council/AFL-CIO letter reads: “Accounting rules dictate that immediately upon being signed into law, this tax liability would have to be reflected on company financial statements. This would substantially increase liabilities for the very companies providing the most comprehensive coverage to current and future retirees. In the current economic environment, this would be particularly ill-advised and disruptive. Moreover, it would compel many employers to cease offering the coverage and require their retirees to obtain coverage through Medicare Part D, at considerably greater cost to the government. Independent calculations show that if as few as 24 percent of retirees are dropped from employer plans and obtain coverage through Medicare Part D, then [this] will be a net revenue losing provision.”
Additional materials are also available and will be discussed during the briefing:
For more information, or to arrange an interview with Council staff, please contact Jason Hammersla, Council director of communications, at 202-289-6700 (office) or (202) 253-5458 (cell)
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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.
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