Yet Another Failure from ObamaCare

As of January 1st yet another ObamaCare provision has crashed and burned. This is the “Early Retiree Reinsurance Program” (ERRP), which was a $5 billion giveaway to unions, state and municipal governments, and fat cat corporations.

The idea was to encourage such entities to continue health benefits for early retirees (age 55 — 64) until the wonders of ObamaCare kick in in 2014. The program provided “reinsurance” of 80% of claims between $15,000 and $90,000. Using the word “reinsurance” for this program is another case of Orwellian-speak by this Administration. “Reinsurance” suggests that the beneficiary paid a premium for the coverage. But in this case it was simply a matter of shoveling taxpayer money into the coffers of the chosen organizations.

The program began on June 1, 2010 and was supposed to last until January 1, 2014. But it turns out that getting free money was so popular that all the dough ran out by January 1, 2012 — a mere 19 months. So, no more money will be distributed, alas.

It will be interesting to see what happens next.  Virtually all of these organizations have union contracts that require them to provide the benefits, so they are unlikely to suddenly drop the coverage.

Let’s take a look at who got the moolah in a few sample states — Illinois, Ohio and Pennsylvania. These are the numbers as of December 2, 2011.

Illinois. In Illinois, 146 organizations received funds, of which 34 went directly to unions and 31 went to state or local governments. The organizations that received $5 million or more include:

  • Abbott Laboratories                                                8,599,923
  • BOT of County Employees and Officers Fund       6,177,913
  • BP Corporation                                                     16,179,320
  • Caterpillar, Inc.                                                     20,335,732
  • Chicago Transit Authority                                      6,801,120
  • City of Chicago                                                       9,476,498
  • Deere & Company                                                23,100,529
  • Exelon Corporation                                              11,995,923
  • Kraft Foods                                                             5,401,682
  • Millercoors LLC                                                      5,899,012
  • Motorola, Inc.                                                         5,076,088
  • Navistar, Inc.                                                         13,392,799
  • Public School Teachers Pension Fund                     5,790,870
  • The Boeing Company                                           50,160,905
  • United Airlines                                                      13,983,605

Ohio. In Ohio, 105 organizations received funds, of which 36 went directly to unions and 2 went to state or local governments. The organizations that received $5 million or more include:

  • Bridgestone Americas, Inc.                                      5,144,493
  • Firstenergy Corp                                                     6,125,591
  • Ohio Public Employees Retirement System        180,084,872
  • Police and Firemen’s Disability                             16,870,013
  • State Teachers Retirement System                        75,998,236
  • The Proctor & Gamble Company                         19,186,151
  • The Timken Company                                            5,378,873

Pennsylvania. In Pennsylvania, 147 organizations received funds, of which 24 went directly to unions and 57 went to state or local governments. The organizations that received $5 million or more include:

  • Alcoa, Inc.                                                             17,404,025
  • Commonwealth of Pennsylvania                           32,192,146
  • GlaxoSmithKline, LLC                                            7,641,945
  • Retirees of Goodyear Tire & Rubber                       7,362,723
  • Steelworkers Health & Welfare Fund                      7,720,376
  • United States Steel Corporation                            11,752,168

So again, the entire $5 billion was depleted in just 19 months, instead of the 43 months originally projected. That is swell for the organizations that got the money, but now we are right back to where we started. All of these organizations now have to pay for the benefits themselves or drop their coverage. But most are forbidden from dropping coverage because of union contracts. Perhaps they will have to renegotiate these contracts, which is what they should have done 19 months ago.

(Hat tip to Peter Suderman, whose December 12 article in Reason provided the links to this information.)



Comments (9)

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  1. Ken says:

    This is what they call crony capitalism.

  2. Brian says:

    It seems neo-corporatist, but that might not be the right word to describe it.

  3. Buster says:

    It is a commonly known fact that our health deteriorate with age. We all want the benefits of medical science to treat our medical problems. But there is a persistent aversion to making people take responsibility for their own medical needs.

  4. Mustafa says:

    More evidence that Obamacare = Epic Fail.

  5. Richard says:

    Don’t be surprised if in some other bill, someone sneaks in a few billion to keep the program going. This is the kind of ‘spending’ that is never the headline for a bill and flies below the radar because the lobbyiests don’t care who else is getting what as long as they get what they wanted. And the above list of recipients tells you who will be lobbying FOR the extension…

  6. cy wood says:

    A program is so popular it runs out of money, so that makes it a failure? By your reasoning, every time someone files for bankruptcy, they have succeeded. It’s intriguing that you harp about governments and unions getting money, when it seems like most of the funds went to corporations. But I suspect the people who agree with you on the Patient Protection and Affordable Care Act don’t bother with facts. They just nod sagely at specious rants.

  7. Greg Scandlen says:

    Hey, Cy,
    Yes, I would call it a failure if I have a food budget that is supposed to last 12 months and I spend it all in three months. That would mean my family starves for 9 months. Liberals might think that is a success, but they don’t know much about budgets, do they?

    I grant you that giving away free money will always be popular, and giving away someone else’s money will be fun for both the giver and the receiver. Maybe not so much fun for the people they take it from.

    But we can all be thankful that we are taxing working people to give money to Boeing, Alcoa, Kraft Foods and Miller Brewing.

  8. frank timmins says:

    Richard, I was thinking the same thing, especially in Ohio and Pennsylvania (key 2012 election states). Perhaps Obama will present a bill to add a little sweetener to the retirement funds at an “appropriate time” this summer.

    Cy, so you think giveaway programs are successful when the takers outrun the funders? That’s an interesting bit of logic, but then after reading your last sentence I better understand the dysfunction.

  9. Jan Peter Ozga says:

    Greg: I continue to be both informed and entertained by your revelations. They should be must reading for policy makers and all health care stakeholders.
    I repeat my recommendations to collect and boil down your myth busters and submit them to the Washington Post for insertion into its Sunday Outlook section. The fuller essays could comprise a book called
    “Health Care Myths — Lessons Learned from Obamacare and Other Government Programs,”
    co-authored by those defenders of liberty and freedom:

    Greg “Father of Consumer Choice” Scandlen
    John “Father of HSAs” Goodman

    Happy New Year!