AT&T's $140 Million Among Top U.S. Retiree Health Payments : April 1 (Bloomberg) -- Eight U.S. companies that earned more than $10 billion last year, led by AT&T Inc., were among recipients of a government program that paid $1.8 billion to for elderly retirees' health-care costs, a report shows.
The program created by last year's health overhaul sets aside $5 billion to help companies pay health insurance for workers who retire early and aren't yet eligible for Medicare, the U.S. program for the elderly and disabled. The Detroit-based United Auto Workers union received the most, at $207 million, followed by Dallas-based AT&T, at $140 million, and New York- based Verizon Communications Inc., with $92 million, according to the report the government released yesterday.
President Barack Obama's administration defended payments from the fund as evidence of a health system in peril, saying the money helped retain insurance coverage for tens of thousands who may otherwise lose it as firms drop retiree plans.
"The overwhelming response to this program demonstrates exactly how broken the current health system has been, and exactly why we needed reform in the first place," Steve Larsen, director of the Health and Human Services Department office implementing the law, said yesterday in a conference call.
Obama has said that helping people maintain their health coverage and allowing businesses to continue coverage for workers are among the law's priorities. Business groups led by the Washington-based U.S. Chamber of Commerce have been critical of the overhaul, saying it contains costly new mandates their members can't afford.
AT&T's Profit
Representative Cliff Stearns, a Florida Republican, peppered Larsen with questions about the program at a U.S. House hearing today, repeatedly interrupting Larsen's responses.
"Why in the flip are you giving out so much money from taxpayers so freely and so overwhelmingly to companies that are so profitable?" Sterns asked.
Larsen said of the companies at one point that "the program allows them, positions them to continue to offer this critical benefit to early retirees."
AT&T's net income in 2010 was $19.9 billion, according to Bloomberg data. Mark Siegel, a spokesman for the company, declined to comment in an e-mail.
Eight of the 17 U.S. companies that had more than $10 billion in profit last year received money from the retiree fund, according to the report and Bloomberg data.
Citigroup, IBM
The list includes Citigroup Inc., which received $1.8 million; JPMorgan Chase & Co., at $2.9 million; International Business Machines Corp., at $13 million; Johnson & Johnson, at $2.5 million; General Electric Co., at $37 million; Intel Corp., at $950,000; and Procter & Gamble Co., at $6.6 million.
Larsen said yesterday the government didn't limit which employers were eligible to apply for the fund.
"This program helps all companies to continue the retiree coverage they're offering today," he said.
Richard Popper, who directs insurance programs for Larsen's office, said 80 percent of payments from the fund were less than $1 million.
Democratic sponsors of the health-care overhaul said the retiree fund is intended as a stop-gap measure to prevent more Americans from becoming uninsured before subsidized coverage is expanded to about 32 million people beginning in 2014.
Among firms with 200 workers or more, only 28 percent offered early retiree health coverage in 2010, according to the Kaiser Family Foundation, a Menlo Park, California, research institute. That's down from 66 percent in 1998.
Retiree Program
Under the retiree program, the government pays as much as 80 percent of early retirees' health-care expenses, amounting to $15,000 to $90,000 for each person.
The administration had approved 5,850 applications as of March 17. So far, 1,300 organizations have received money to cover more than 100,000 early retirees, according to the report.
At least 44 groups received more than $5 million. Some of the biggest recipients were unions and states. In addition to the UAW, the state of New Jersey received $39 million, the California Public Employees Retirement System, or Calpers, got $58 million, and the Georgia Department of Community Health also received $58 million, according to the report.
Also among the groups were General Motors Co. and Boeing Co., which each received $19 million, and Alcatel-Lucent SA, with a payment of $13 million.
Republicans in the U.S. House of Representatives estimated in a report last week that the retiree health fund would run out of money as soon as this year. Melissa Nitti, an HHS spokeswoman, said the fund would be closed to new applications as of May 5.
