Combined Fund Analysis

Pursuant to a congressional request, GAO reviewed two studies of the United Mine Workers of America (UMWA) Combined Benefit Fund. GAO noted that: (1) the consultants' models projected widely differing financial results for the UMWA Combined Benefit Fund; (2) the models' expense estimates for 1995 differed by about $16 million; (3) one of the models underestimated the UMWA fund's 1995 net expenses by approximately $3 million; (4) one consultant based its medical cost inflation assumptions on the Fund's past and current efforts to contain cost growth in prescription drugs; (6) the other consultant relied on the Medicare trust fund's projections of medical inflation and adjusted these estimates to reflect the Fund's past experiences; and (7) the later assumptions may be more reasonable and may be more accurate in predicting the Fund's status beyond 1995.