A. L. Lotts, Chair, CORRE Government Relations Committee, to Senate Committee on Health, Education, Labor, and Pensions, Subject: Is the Department of Energy diverting Medicare Part D funds from the intended use?, July 26, 2007. (via Email)
(Note that this correspondence was also sent to the House of Representatives Committee on Energy and Commerce which has jurisdiction on Medicare issues. Copies of this correspondence was also sent to staff of the local Congressional Delegation so that they could be aware of this issue.) |
A. L. (Pete) Lotts
Chair, Government Relations Committee
Coalition of Oak Ridge Retired Employees
11125 Hatteras Drive, Knoxville, TN 37934
865-675-7394 allotts@tds.net www.corre.info
July 26, 2007
Senate Health, Education, Labor, and Pension Committee
U. S. Senate
Washington, DC
Via: Email
Dear Members of Congress:
Subject: Is the Department of Energy diverting Medicare Part D funds from the intended use?
We believe that there is evidence that DOE is circumventing the intent of Congress by withholding Part D Medicare funds from contractors for partial payments of their costs of maintaining drug benefits for retirees.
Our understanding is that the 2003 Congress passed the Medicare Improvement Act to benefit older citizens. This Act established a prescription drug benefit for those on Medicare, and this benefit took full effect in 2006. The government wanted companies to continue to offer a drug benefit to their retirees, if they were already doing so. To encourage them to do this, the government offered a 28% subsidy based on the cost of their drug plan. The subsidy was to go to the employer (or labor union if a union had such a plan). In order to obtain the subsidy, the company had to apply and list the retirees who were covered.
The DOE contractors were apparently discouraged by DOE from applying for the subsidy. In the case of the Oak Ridge, Tennessee facilities, UT-Battelle LLC, operator of Oak Ridge National Laboratory, applied for the subsidy, but that request was rejected by DOE. BWXT LLC (operator of the Oak Ridge Y-12 Plant) did not apply for the subsidy after it heard about the rebuff of UT-Battelle’s application. We do not know whether other DOE contractors in Oak Ridge applied. Since the contractors split the cost of their drug benefit with retirees on a 50-50 basis, the easiest way for them to apply the subsidy would have been to apply it to the total insurance cost (and thus reduce the cost) and then split the remaining cost on a 50-50 basis. However, the contractors have not received this subsidy from the DOE.
Thus, we are being told by contractor managers that DOE is refusing to allow this and that DOE is insisting on keeping the subsidy, either for DOE or for the US government. We believe that this is not what the legislation intended. We believe the legislation intended to subsidize the employer. And, we believe the employers (the companies) would have passed on half of the benefit by reducing retiree costs, which have been seriously escalating over the last few years.
We want to bring to your attention the fact that the EMPLOYER has to apply for the subsidy and that the DOE is not the EMPLOYER. We would further like to point out that, If DOE were the EMPLOYER, we would have federal pensions along with their COLA, which would be a very large enhancement for retirees of Oak Ridge contractors. This action by the DOE means that the DOE is no longer splitting costs of the drug benefit on a 50-50 basis. Thus the DOE has reduced its benefit by keeping the subsidy and abrogated a long-standing practice of providing one-half of the insurance payment for retiree health insurance.
We would appreciate your examining this practice of DOE to see if it meets Congressional intent and whether there is a need to clarify the legislation to see that benefits come to the people and not to the government as a cost reduction measure. We would appreciate being informed of the result of your consideration of this matter.
Sincerely,
A. L. Lotts
cc: David Reichle, President, CORRE |
