Retiree health benefits are on the endangered species
list, right up there with defined-benefit pension plans. A study last year by the Kaiser Family Foundation and Health Research and Educational Trust showed that 38% of employers with 200 or more workers offered retiree health benefits in 2003, down from 66% in 1988. And earlier this year, a survey co-sponsored by Kaiser and Hewitt Associates found that 20% of the big companies offering such benefits might eliminate them for future employees over the next three years. Consulting firm Watson Wyatt predicted a couple of years ago that by 2031, employers will be paying for less than 10% of retiree health costs.
The new wild card in this area is last year's Medicare drug law, which includes subsidies for employers intended to encourage them to continue providing drug coverage to their retirees. Some observers say that in spite of that, the law will contribute to the long-term erosion of retiree health benefits.
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