Central Pension Fund

To Preserve Retirement Security Reform Health Care Now

Members of the International Union of Operating Engineers are fortunate to be among the diminishing number of workers in the United States that continue to have traditional pension plans available to them. While corporations are terminating their plans in record numbers, the network of pension plans maintained by the International Union and its Local Unions throughout the United States remains strong. However, if the new Congress does not move quickly and dramatically to reform the U.S. health care system, the retirement security provided by these pension plans will continue to erode.

Run-away health care costs erode the retirement security of pension plan participants in two obvious ways. First, at the bargaining table it is necessary to divert money in the fringe benefit package from pension benefits to health benefits. This results in a lower retirement benefit than would have been accrued but for run-away health care costs. Second, the value of the pension benefit paid in retirement is continually eroded by increasing health care costs.

A recent study, conducted by the International Union of Operating Engineers, found that in 2005 IUOE Local Union health and welfare funds experienced a 9.5% increase in medical costs and a 10% increase in prescription drug costs. And for 2006 those plans anticipated a 10.4% increase in medical costs and a 13.4% increase in drug costs.

The IUOE’s experience mirrors that of the U.S. economy as a whole. The numbers are staggering:

The 87% increase in insurance premiums was a direct result of the increased number of uninsured individuals, because the cost of the $43 billion of health care provided to the uninsured was shifted directly into increased costs for those with insurance.

Without sweeping health care reform, more and more employers will abandon their health insurance plans. They simply can’t afford them. That will then drive up the number of uninsured individuals which will, in turn, continue to drive up the cost of health insurance for those who remain insured --- including the members of the International Union of Operating Engineers.

What we are witnessing is an accelerating death spiral of the U.S. health care system. This death spiral is not a matter of conjecture, it is well documented and acknowledged by experts across the political spectrum. IUOE General President Giblin has called upon elected officials across the political spectrum to acknowledge this crisis, and put its solution at the top of their legislative agenda when the new Congress convenes.

Both the health security and retirement security of U.S. workers depend upon a swift and bold response to this call.

November 14 2006