On March 23, Republican members of the House Energy and Commerce Committee released a report projecting the future of the national health care reform law’s Early Retiree Reinsurance Program (ERRP).  Under the program, health reform allocates $5 billion for businesses, unions, and state and local governments to cover health care costs for early retirees between the ages of 55 and 65.  Running through December 2014, the program will cover 80 percent of the costs of retirees’ claims between $15,000 and $90,000 and offer coverage for early retirees’ spouses and dependents.  The committee found that the program spent $535 million on health care costs for 253 organizations in 2010.  Noting that over 5,000 additional organizations are approved to receive future payments from the program, the authors caution that the fund could be depleted in 2011 if all approved organizations access funding at a rate similar to the first 253.

From the report:

The Early Retiree Reinsurance Program (ERRP), a $5 billion fund hailed as one of the key early benefits of the Patient Protection and Affordable Care Act (PPACA), will exhaust its resources long before the planned sunset on January 1, 2014, according to information provided by the Center for Consumer Information and Insurance Oversight (CCIIO). Recent figures show that CCIIO has approved over 5,000 entities to participate in the program. In 2010, however, CCIIO doled out $535 million to just 253 of those entities. Based on those spending patterns, the fund will exhaust its resources much sooner than originally estimated, with the majority of that money going to state and local governments. If the fund runs out of money, it is highly unlikely that the remaining beneficiaries, including unions and large corporations, would be able to obtain Congressional approval or public support for assistance on an individual basis.

Full report:Impending Exhaustion of Funding for Early Retiree Reinsurance Program (PDF | 117.99MB)

House Energy and Commerce Committee.  (2011).  Impending exhaustion of funding for early retiree reinsurance program.