About seven hundred retired workers from the pulp and paper mills in northern New Hampshire suddenly lost health and life insurance coverage late last month. The coverage had been provided by Crown Vantage, which formerly owned the plants. The company's bankruptcy ended the coverage, but as NHPR?s David Darman reports, many companies could cut health insurance for less serious reasons.
LEAD: About seven hundred retired workers from the pulp and paper mills in northern New Hampshire suddenly lost health and life insurance coverage late last month. The coverage had been provided by Crown Vantage, which formerly owned the plants. The company ended the coverage as part of its bankruptcy, but as NHPR?s David Darman reports, many companies could end health insurance for less serious reasons.
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Edward Ferrara worked at the pulp and paper plants in Berlin and Gorham for 37 years. Ferrara retired 15 years ago, and had medical insurance and a pension death benefit as part of his retirement package. The health insurance ended abruptly and without notice in the latest round of Crown Vantage?s bankruptcy, and Ferrara is bitter that worker sacrifices over the years have come to nothing.
06 11 We always assumed that they owed us something, because, you know, these benefits at the time, we gave up wages to acquire more benefits, you know. In other words, if they were going to give us 50 cents an hour, we took 48 and bought benefits with them. And we lost wages, and now benefits.06 35
Many of the retirees are upset over the loss of their health insurance, but most retirees have some coverage through Medicare. Retirees who have not reached 65 face a bigger problem. These former workers have completely lost their health coverage.
The seven hundred effected retirees are represented in Crown Vantage?s Bankruptcy proceedings by their union, the Paper, Allied-Industrial, Chemical and Energy, or PACE union. Attorney Chris Raisner represents the union in the bankruptcy. Raisner says the union negotiated for continued insurance for as long as possible, but with money running low, time simply ran out.
04 231 We got about 5 additional months, approximately, of coverage, for the retirees, from when the motion to eliminate it was first brought. You know, it was a question of time. I?m glad for every single month that we could get. But that?s what it comes down to. 04 258
Though Governor Jeanne Shaheen asked the insurance commissioner to investigate how the state might help the retirees regain health coverage, there doesn?t seem to be much the state can do. Paula Rogers, state insurance commissioner, says there might have been state protections for the retirees, if they had been covered by an H-M-O or an insurance company. But Rogers says Crown Vantage avoided state oversight of their health plan by self insuring.
15 the insurance department can likely do very little, unless there?s an insurance company, somewhere bearing the risk, and in this instance, its my understanding that it was a fully self insured program and so the strength and economic vitality of that program is basically mirrored by the financial strength of the company?
Between 40 and 50 percent of the workers insured by their employers work for companies that self insure health coverage. Health policy analysts say there are a number of attractions for companies to self insure. Jon Gabel, vice president of the Health Research and Education Trust, which is affiliated with the American Hospital Association, identifies some of the things company officials find so attractive.
08 you are not subject to state regulation. That means you don?t have to pay premium taxes, which may be one or two percent of revenue. It means you?re not subject to state mandates. You?re not subject to state solvency requirements?you?re not subject to state reserve requirements, you?re not subject to consumer protections.
Companies that self insure are subject to federal benefits law, but that law is weak regarding health insurance. Federal law is much stronger regarding pensions. Crown Vantage retirees in New Hampshire are beginning to worry about their pensions, especially the plan?s death benefit. But John Chavez, a U.S. Labor Department Spokesman in Boston, says the federal government insures pensions through the ?Pension Benefit Guarantee Corporation?.
12 21 if a company wants to terminate a pension plan, they also have to do that in an orderly way and notify p-b-g-c, which can basically continue to provide the benefits for the retirees. 12 41
While state government and federal agencies have limited power to save or restore the lost benefits of retirees, the PACE union is trying to salvage what it can in the Crown Vantage bankruptcy. Union officials say they expect Crown Vantage will offer a prescription drug benefit for the 700 retirees. They say that benefit will probably last only a year, until the money runs out.
