There are more than six states suing to overturn President Barack Obama’s health care law are also claiming its subsidies for covering retired state government employees. And 2,000 employers have been approved for the extra help to cover early retirees, mainly private businesses. There are also seven states suing to overturn the health care overhaul as an unconstitutional power grab by the federal government. Those states include Arizona, Idaho, Indiana, Louisiana, Michigan, Nebraska and Nevada.
These are all parts of the 20 states that have challenged the law’s requirement for most Americans to carry health insurance or face fines from the IRS. The argument states that the government can’t order individuals to buy a particular product. The Administration argues that this falls under the interstate commerce clause. The employers interested are about one half of the Fortune 500 companies as well as state and local governments, educational institutions, unions and nonprofit organizations. Sixteen states have already been approved.
In the past 20 years, health care has skyrocketed with employers cutting back on retirees’ medical. The amount the employer paid has dropped from 66% in 1988, to 29% today. To try to hold off a steeper drop, the health care law provides $5 billion to help employers maintain coverage for early retirees age 55 and older but not yet eligible for Medicare.
Companies can use the federal money to lower their own costs, or pass on the savings to their retirees through lower premiums and reduced cost sharing. Firms that receive federal help have to formally notify their retirees that they’ve gotten a subsidy.
The private employers approved for the subsidy include Levi Strauss, United Airlines, Kellogg Co., Mattel, Hewlett-Packard and Dow Chemical, to name a few.
