Future Security of Retirees Health Benefits in Question

GAO discussed private-sector health care benefits for retirees and changes implemented or currently being considered. GAO estimated health benefit costs and future liabilities, and found that: (1) the present future value of future retiree health benefits was about $402 billion, including liabilities of $93 billion for retirees, $128 billion for active workers' past service, and $181 billion for benefits workers will earn before retirement; (2) annual benefit payments for retirees would increase from about $10 billion in 1988 to approximately $25 billion by the year 2008; and (3) if employers began advance-funding health benefit liabilities, they would pay about $34 billion. GAO also found that a number of companies it surveyed: (1) modified their health plan provisions and increased employee and retiree contributions to control costs; and (2) expressed concern about their ability to continue to pay for retiree health care benefits. GAO believes that Congress may wish to require employers to: (1) offer retirees group rates for health coverage; and (2) advance-fund their retiree health liabilities on a voluntary basis.