This article first appeared in the St. Louis Beacon, April 18, 2011 - The Clayton School District spends about $3 million a year on employee health insurance. Because the expense has doubled in a decade, the district's chief financial officer, Mark Stockwell, is always on the lookout for savings. He's pleased to make even a small dent.
That explains why he's grateful that the district is getting $119,000 from the federal Early Retiree Reinsurance Program to help the district and its retirees offset their health expenses.
At least 167 entities in Missouri -- ranging from Anheuser-Busch Companies Inc., to the Archdiocese of St. Louis -- have turned to the ERRP to lighten the financial load from rising health insurance premiums and co-pays. It's a good thing that Clayton and others applied early, because the national response has been so great that the federal government's $5 billion investment in ERRP is expected to vanish as early as this year. The money was projected to last as long as 2014, but the federal government says the program has been so popular that applications won't be accepted beyond May 5.
That means many other large and small businesses, state and local governments, nonprofit organizations, unions and religious organizations could be out of luck unless they have applications in by early next month. There's no indication that Washington, which is in a cost-cutting mood, is willing to extend ERRP. The 167 Missouri groups that got ERRP funding are among about 1,300 that have been helped nationwide.
The $119,000 going to the Clayton district might seem like small change, but Stockwell says, "It will make a difference. We're looking for anything we can do to try to keep our costs down. You can use it to lower co-pays, for example, or do other things to make health care more affordable for all of your plan participants."
He says ERRP targets retirees in particular, workers who are at least 55 and not old enough to qualify for Medicare.
"I wouldn't be doing my job if I hadn't applied for this," he says. "There's no cost to the district, and the money will offset charges that employees and retirees and the school district would pay for coverage."
"Early retirees fall into a health care coverage gap -- they're often no longer eligible for employer plans and not quite eligible for Medicare," said Ryan Barker, director of health policy at the Missouri Foundation for Health (MFH). "As a result, we see Missourians who otherwise might have retired staying in the workforce until Medicare kicks in. The Early Retiree Reinsurance Program gives an incentive to employers to keep early retirees in their plans. This provides a much needed bridge to Medicare or the Health Insurance Exchange, whichever comes first for a retiree."
But there are some concerns beyond the fact that the money will dry up more quickly than expected, says Louise Probst, executive director of the St. Louis area Business Health Coalition.
The idea of the program is to provide a bridge to health care for early retirees until health insurance exchanges are up and running under the Affordable Care Act. But she says ERRP demonstrates it's time for the nation to deal with the health care cost issue.
"Often we've done cost-shifting from one sector to another. For instance, the health reform bill tried to close the donut hole for seniors."
One of the consequences, she says, is the shifting of cost to employer-sponsored coverage and to consumers.
"We're now seeing the biggest increase in drug costs that we've probably seen in 10 years. That's essentially is how the donut hole got closed."
She says that whether the discussion is about closing the donut hole or helping early retirees, the issue "gets back to this idea, this concept of cost shifting. Getting a deal for one sector at the expense of another just doesn't work."
The answer, she says, is for all stakeholders to "work together to take waste out of the system and improve quality while reducing costs. I think it (ERRP) was intended to help, but there are always unintended consequences. We need to be careful about that."
ERRP Defined
The Early Retiree Reinsurance Program provides reimbursement to participating employment-based plans for a portion of the costs of health benefits for early retirees and early retirees' spouses, surviving spouses, and dependents.
The program was authorized in the Affordable Care Act.
Funding for the Beacon's health reporting is provided in part by the Missouri Foundation for Health, a philanthropic organization that aims to improve the health of the people in the communities it serves.
