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President

# George J.Kourpias

Secretary-Treasurer

## Ruben Burks

**Testimony of**

**Donald Newcomb**

**On behalf of**

**The Alliance for Retired Americans**

**Before the**

**Committee on Government Reform**

**Subcommittee on Human Rights and Wellness**

**U.S House of Representatives**

**July 17, 2003**

888 16^th^ Street, N.W., Suite 520 · Washington, D.C. 20006-4103 · (202)
974-8222 ·(202) 974-8256 (Fax)

Testimony of

Donald Newcomb of

The Alliance for Retired Americans

Before the

Committee on Government Reform

Subcommittee on Human Rights and Wellness

U.S House of Representatives

July 17, 2003

Chairman Burton and Members of the Human Rights and Wellness
Subcommittee, thank you for holding this hearing today on the proposed
Medicare prescription drug benefit and its effect on seniors.

My name is Donald Newcomb from Indianapolis, Indiana. I am here today
representing the Alliance for Retired Americans. The Alliance is a
national organization of over three million members that works to create
an America that protects the health and economic security of seniors,
rewards work, strengthens families and builds thriving communities. It
was launched in January 2001 by a national coalition of labor unions and
community-based organizations dedicated to improving the quality of life
for retirees and older Americans.

I worked for the Ford Motor Company and Visteon in Indiana for 38 years.
It was my entire working life except for four years I spent in the Air
Force. For three years I was a UAW international benefits representative
where I dealt with the many problems retirees face under current health
coverage. Although Visteon was spun off from Ford in 1999, we still
receive retirement benefits from past UAW-Ford agreements. Our benefits
include an employer-paid prescription drug program with a retiree
co-pay. In order to obtain that coverage, wages and pension
contributions are lower as a result of the UAW-Ford agreements. Our
retirees receive lower Social Security and pension payments because part
of our benefits package goes to pay for retiree health care. Now those
benefits are threatened.

I retired last year. The main reasons were my wife's illness and my
brother's heart attack. My wife was taking 17 prescriptions at the time.
Fortunately, her condition has improved and she is now down to three
prescriptions. We are afraid, however, this will not continue. My
brother's heart attack has disabled him. After having by-pass surgery,
he is now taking several prescriptions. His wife is terminally ill with
cancer and is undergoing radiation and chemotherapy at the same time. My
mother-in-law needs several prescriptions because she suffers from
Alzheimer's disease. I, myself, take prescription medication for high
cholesterol and back problems. As you well know, prescription drugs are
a central part of medical care today.

I and other UAW retirees are worried that the bill passed by the U.S.
House of Representatives, H.R. 1, will put Visteon and other retirees at
risk of losing their prescription drug coverage. [Many employers may use
the legislation to drop retiree coverage.]{.underline} I know that the
Congressional Budget Office has told you that over four million retirees
with prescription drug coverage could lose those benefits under this
bill. Members of the Subcommittee, I am here today to tell you that I am
one of those four million. And I am worried to death what the effect
would be on my family and on other retirees in my community and nation.
Already, I have seen firsthand many friends dropped by their HMOs in
Hancock County in Indiana.

We are troubled that this bill does not provide incentives for employers
to provide or keep retiree health coverage. We have to

re-negotiate our retiree benefits when our UAW contract expires this
year. We are afraid that a prescription drug benefit is one of the
things that may go.

Loss of our prescription coverage would drastically reduce our benefits
and greatly increase our out-of-pocket costs. Right now, we have no
monthly premium. We have no deductible to meet before our benefit
starts. Our co-pay is only \$5 for generic drugs, with varying costs for
brand names. Remember, these are hard-won benefits for which retirees
received lower wages during their working lives and now have lower
Social Security and pension checks in their retirement.

Under H.R. 1, we would pay \$35 per month and a \$250 deductible before
receiving any benefit. We would then have a co-pay of 20% on the next
\$1750. After that we will be responsible for all the costs of our
prescriptions from \$2000 to \$4900, while still paying premiums every
month.

The House bill discriminates against retirees who have coverage through
employer-provided health plans. The fact that employer contributions
would not count toward meeting the catastrophic "stop-loss" protection
is deeply troubling. That's not the way it currently works for Parts A
and B in existing Medicare for hospital and doctor care. The employer
contributions count. Although many in Congress may claim this trick will
save money for Medicare, any provision that encourages employers to drop
their retiree benefits will only end up costing the federal government
more -- and hurt millions of seniors in the process. And, if you're not
eligible for Medicare, and I am not yet 65, the results could be
financially disastrous -- with potentially no coverage at all.

Employer-sponsored retiree health benefits are the single greatest
source of coverage for retirees, providing drug coverage for nearly one
in three Medicare beneficiaries. However, retiree coverage is declining
dramatically. Just 34 percent of all large firms with 200 or more
workers offered retiree benefits in 2002. That is down from 68 percent
of all large firms in 1988. The way that H.R.1 treats employer provided
coverage the situation could only get worse. More burdens will actually
fall on the federal government and more retirees will be hurt in the
process.

Members of the Subcommittee, I am here today to ask that you enact a
drug benefit that supports employers that are doing the right thing and
providing prescription drug benefits to their retirees. Millions of
seniors have relied on and planned their retirements based on these
benefits. To do otherwise will further threaten retiree drug coverage
and will make millions of seniors worse off. Thank you very much for
inviting me here.