Early Retiree Health:

Health Security Act Would Shift Billions in Costs to Federal Government

HEHS-94-203FS: Published: Jul 21, 1994. Publicly Released: Jul 21, 1994.

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Pursuant to a congressional request, GAO provided information on the impact of the proposed Health Security Act on retiree health care costs, focusing on the: (1) projected costs of early retiree health benefits for the federal government and U.S. companies; and (2) potential savings for these benefits under the act.

GAO noted that: (1) companies and early retirees could realize substantial savings if the act were enacted; (2) under the act, early retirees would pay nothing for their health benefits and the government would cover up to 80 percent of company health benefit costs by the year 2000; (3) within 3 years of the act's implementation, the federal government's costs would increase dramatically and company health benefit costs would be reduced; and (4) over a 10-year period, companies would save up to $130 billion and their net worth would increase significantly because the companies' accrued liability for their early retirees would fall by $188 billion by 2001.

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