In a preamble to the new regulation, published Wednesday in the Federal Register, the commission said, “The final rule is not intended to encourage employers to eliminate any retiree health benefits they may currently provide.”Under the new rule, employer-provided benefits could be reduced for employees over 65 by the amount of benefits provided by Medicare, thus keeping the total benefit the same while reducing the benefit costs to the employer.
But AARP and other advocates for older Americans attacked the rule. “This rule gives employers free rein to use age as a basis for reducing or eliminating health care benefits for retirees 65 and older,” said Christopher G. Mackaronis, a lawyer for AARP, which represents millions of people age 50 or above and which had sued in an effort to block issuance of the final regulation. “Ten million people could be affected — adversely affected — by the rule.”
The new policy creates an explicit exemption from age-discrimination laws for employers that scale back benefits of retirees 65 and over. Mr. Mackaronis asserted that the exemption was “in direct conflict” with the Age Discrimination in Employment Act of 1967. - The New York Times
The theory behind the rule is that if employers are able to reduce their healthcare costs for older (and thus, anticipated-to-be-more-expensive) employees, they are more likely to retain benefits, insstead of reducing benefits across the board.
Of course, those costs are not magically dissipated, instead of being paid by the employer, they are paid by the taxpayer. Thus, in order to keep benefits the same, these costs must be covered by you and me, in the long-run meaning higher taxes. And rules like these will not help fix the erosion of health insurance benefits across the board. It's interesting that the Bush Administration feels that government health insurance is not good enough for children, but is good enough for people over 65.
No wonder one-third of Americans want to chuck the whole system and start over.