WASHINGTON – President Barack Obama’s health care law created a $5 billion fund to shore up coverage for early retirees, and some of that money is flowing to places you might not expect.
Two Texas public employee programs are among the top 25 recipients of the federal subsidy despite Texas Gov. Rick Perry’s opposition to the law Republicans derisively call “Obamacare.”
And records show the Huntsman family business, where GOP presidential candidate Jon Huntsman sharpened his executive skills, received about $1 million.
It highlights the gap between dire Republican rhetoric about the health care overhaul and the pragmatic impulse to cash in on a new government benefit.
Employer-sponsored health insurance for retirees has been shriveling for years, ever since companies were required to report the estimated liability to investors. Democrats who wrote the new law wanted to provide an incentive for employers to keep offering coverage. Only about 6 percent of private companies currently offer such a benefit for early retirees, according to the nonpartisan Employee Benefit Research Institute.
But that still works out to more than 400,000 companies. Add state and local government agencies, as well as union plans, and the number swells. Indeed, the Obama administration’s subsidy program got so many applications it stopped accepting new ones after approving more than 6,000. The program pays 80 percent of the claims amount for early retirees ages 55 to 64 whose care costs between $15,000 and $90,000.
The top beneficiary: the United Auto Workers retiree medical plan, which has collected more than $220 million.
“Some people have described this program as `Cash for Clunkers,’ in the sense that if you want it, you have to get in line first,” said Paul Fronstin, an economist with the research group. “There was a lot of advice given to be first in line.” The original Cash for Clunkers was an Obama administration program that paid people to trade in gas guzzlers for more fuel-efficient transportation. It created a marketing sensation before running out of cash.
Texas, it seems, heeded the advice. So did Huntsman International.
The Teacher Retirement System of Texas, a statewide system for public education employees, received more than $70 million as of Sept. 22, according to the federal Health and Human Services Department. The Employees Retirement System of Texas, which covers state employees, received about $30 million.
Huntsman International, the main operating subsidiary of the family-founded chemical conglomerate, is also collecting subsidies.
As candidates, both Perry and Huntsman have sworn to repeal Obama’s signature health care law, which gradually extends coverage to most of the uninsured and makes numerous other changes, including a ban on insurers denying coverage to people in poor health and an unpopular requirement that most Americans carry coverage.
Spokesmen for the Perry and Huntsman campaigns said they see no contradictions.
Texas taxpayers also pay federal taxes, said Perry spokesman Ray Sullivan. “State taxpayers have a right to get those federal funds returned to them, in this care in the form of disbursement to the teachers and state employee retirement systems,” said Sullivan. “No Texas law or policy needed to be changed in order for these agencies to be eligible to receive the funds.”
Huntsman spokesman Tim Miller said his candidate, Obama’s first ambassador to China and a former governor of Utah, is opposed to all subsidies.
Jon Huntsman has not been involved in the family business since 2005, said company spokesman Gary Chapman. Huntsman resigned from the company to pursue his political career.
Asked why Huntsman International applied for the early retiree subsidy, Chapman responded: “We’re a commercial organization. We are looking to maximize our shareholders’ value. If there was a legitimate opportunity for us to get help in this respect, we would go for it.”
Republicans have tried to paint the early retiree subsidy program as a political reward to unions, among the staunchest Democratic loyalists. According to calculations by the office of Sen. Mike Enzi, R-Wyo., the United Auto Workers Retiree Medical Benefits Trust has made out the best.
A UAW spokeswoman did not respond to requests for comment. In its 2007 contracts with Chrysler, GM and Ford, the union agreed to form the trust to pay health care costs for the companies’ retirees, including early retirees too young to qualify for Medicare. The trust started paying bills in January 2010, before Congress passed the health care law.
The calculations by Enzi’s staff also list AT&T, Verizon, General Electric, General Motors, Qwest, Caterpillar and other private companies in the top 25, not to mention the two Texas state programs. AT&T received $157 million.
Several media companies are also benefiting. The Associated Press, a nonprofit news-gathering service owned by the nation’s newspapers, has received $191,888.
Back in Texas, public and private employer retiree plans have collected more than $326 million from the subsidy. They range from American Airlines to Texas A&M University — Perry’s alma mater.