New Bills Seek to Solve Steel Benefits Issue
April 16, 2002 (PLANSPONSOR.com) - Faced with a faltering
steel industry, lawmakers are drafting legislation proposals
aimed at financing the costs of health insurance for steel
workers and retirees.
An aide in Senator John Rockefeller's (D-West Virginia)
office told PLANSPONSOR.com that he plans to introduce a bill
that will address the beleaguered industry's legacy health
costs and will include a death benefit for steel workers,
however it will not touch on pension liabilities.
Representative Phil English (D-Pennsylvania), chairman of
the Congressional Steel Caucus, is also expected to introduce
legislation to address the issue. Although an aide declined to
give details, she did say that a new bill is due out this
week.
At the same time, Representative Peter Visclosky (D-
Indiana), who serves as vice president on the Steel Caucus,
has authored the United Steelworkers Revitalization Act of
2001 (H.R. 808), a draft bill, which seeks to help the
industry back onto its feet. The bill is yet to gain
meaningful support in Congress.
Challenges
The bills come at a time when the steel industry is facing
its greatest challenges. LTV Corp., one of the first steel
companies to file for bankruptcy, announced that it would be
cutting pensions and eliminating benefits for its retirees as
part of its efforts to return to profitability (see LTV
Says It Can't Meet Retirement, Insurance Obligations).
According to the United Steelworkers of America, at the end
of 1999, the steel industry's retiree health care benefit
obligations totaled an estimated $13 billion. Annually,
health care benefits for 600,000 retired steelworkers,
surviving spouses, and dependents can cost domestic steel
producers an estimated $965 million or $9 per ton of steel
shipped.
The average steel company has approximately three retirees
for every active employee - nearly three times the ratio for
most other major basic manufacturing companies.
While the Pension Benefits Guaranty Corporation (PBGC) can
alleviate some of this burden by taking over pension plans,
steel companies are left to figure out how to shoulder health
benefits (LTV
Dumps Pension Liability on PBGC).
Even more injurious, steel companies cannot depend on
Medicare to pick up their health bill tabs-many steel workers
do not qualify because they have not reached age 65.
Changes
The Bush Administration has made some attempts to help out.
Besides proposing a discount card for individuals who qualify
for Medicare, the administration has proposed offering tax
credits to help the uninsured. Under this proposal, a
refundable tax credit of $1,000 to $3,000, depending on family
size, would be made available to individuals without
employer-provided health insurance.
However, steel advocates say this amount is too small given
the surge in health costs, which, a recent report from the
Centers for Medicare and Medicaid Services, shows are expected
to grow at a rate of 7.3% annually until 2011.
Meanwhile, President Bush has made good on his promise to
aid the Steel industry. Recently he approved imposed tariffs
of up to 30% on imported steel under section 201 of the US
Steel Trade Act of 1974.
- Nicole
Halsey
editors@plansponsor.com
Read more at LTV
Workers Set Up Insurance Plan.
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