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Saturday, 7 September 2013

IBM Terminates Company-Sponsored Retiree Health Plan Due To Soaring Costs -

IBM Terminates Company-Sponsored Retiree Health Plan Due To Soaring Costs - 

110,000 current and soon to be eligible retirees working for IBM woke up to an unpleasant surprise this morning, when the WSJ reported that as a result of soaring healthcare costs, the tech bellwether giant will be terminating its company-sponsored health plan and instead giving (soon to be former) beneficiaries a lump sum payment to buy coverage on a health-exchange: a move which the WSJ characterized as indicating that employers are unlikely to keep providing the once-common benefits as medical costs continue to rise. The reason why all IBM retirees will have to find alternative, third-party, retirement coverage upon hitting the Medicare eligible age of 65 is that "IBM said the growing cost of care makes its current plan unsustainable without big premium increases." And to avoid those premium increases, the costs will find a clearing price either in a private exchange (supposedly competitive, realistically monopolistic), or will end up commingled with other public healthcare funding. End result: IBM benefits, everyone else loses.

From the WSJ:

IBM told retirees that its current retiree coverage will end for Medicare-eligible retirees after Dec. 31, 2013, according to documents reviewed by The Wall Street Journal and confirmed by IBM.

"Cost increases under our current retirement group health care plan are no longer sustainable for you," IBM said in the notices. "Health care costs under IBM's current plan options for Medicare eligible retirees will nearly triple by 2020, significantly impacting your premium and out of pocket costs," the notice said.

Exchanges such as Extend Health generally present policies from a range of insurers and let participants choose what best meets their needs and budgets. The aim is to create competition that keeps costs down.
On paper that's fine. The only problem is that as we already from the case of Aetna which recently announced it would pull out of the California individual insurance market, what may instead be happening is a forced monopolization of the "exchange" market, which instead of lowering equivalent prices, would send end prices far higher than under a true free market - a concept the administration which conceived of Obamacare is not on perfect speaking terms with. The only real question is just how higher will the pain for the end consumer truly be at the end of the day.


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