Actually, Charles is lucky. McDonnell Douglas and Unisys Corp. plan to end health coverage completely for nonunion retirees in coming years. A survey by the A. Foster Higgins consulting firm found that two thirds of major corporations have curtailed retiree health plans or intend to in 1993. Many are raising premiums, deductibles and eligibility rules for retirees-the same benefit crunches many current workers have faced. To date, retirees have been insulated from those cold realities. “These 1950s-style plans were left from the days when medical costs weren’t escalating and doctors still made house calls,” says Mary McDermott, a spokeswoman for Primerica Corp., which replaced American Can in the 1980s.
Some retirees are fighting back with class-action suits, which often hinge on the fine print in benefit booklets. Primerica, for example, says the company reserved the right to amend the plan “in conformity with applicable legislation.” But American Can retirees, led by former chairman William F. May, sued to block the increases in 1989, claiming they were promised the $5-a-month plan for life. “It was one thing when [the new owners] sold off the assets. But when they hit employees, it was time to move,” May says. A hearing is set for next week in the case. Breach of promise is just one of “about 14 legal theories” attorney Kevin Roddy, representing some 8,000 McDonnell Douglas retirees, says he’ll use to fight the firm’s plan to end benefits after 1996. Emotional distress is another: “Many of these people have pre-existing medical conditions and they cannot buy health coverage elsewhere.” Last week, a federal judge denied their bid for a preliminary injunction, but promised a quick trial date in the suit.
All sides in the burgeoning benefit dispute are looking to Washington for help. Plaintiffs hope Congress and the new administration will force employers to honor past promises. Some firms are banking on national health reform to bail out their retirees and minimize their future responsibility. With such competing interests at stake, solutions won’t be easy.
