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Health Care Caps: Higher Costs Paid by Retiree, Not Employer
Aired November 25, 2003 - 06:16 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Time now, though, for a little 'Business Buzz.' Companies are not paying more for health care costs, retirees are.
Carrie Lee has more on this story from the Nasdaq market site.
Not good for retirees, people on a fixed income.
CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: It certainly is not, Carol. And this probably comes to a surprise to some people. This is in today's "Wall Street Journal," because a lot of times companies do complain about rising health care costs cutting into their profitability. But when it comes to retirees, a new survey shows that over half of the large companies in this country, at least half of the large companies, including names like IBM and CSX, have actually established ceilings on the amount that they will spend each year on retirees. This according to a study from the Kaiser Family Foundation and Hewitt Associates. Once health care costs reach that ceiling, then the increases are passed along to retirees. And as a result, retirees are the ones that have -- who have seen their out-of- pocket costs rise in recent years.
Quick example here, IBM caps out at $3,500. This, again, cited in "The Journal." IBM spent on retiree health care last year -- the amount of money they spent fell 8.3 percent to $566 million. But the amount that IBM passed on to retirees spiraled 67 percent during that time. So when you hear companies talk about rising health care costs and that putting a crimp on their numbers, well when it comes to retirees, might not actually be true, Carol. This, again, according to "The Journal" today.
COSTELLO: Got you. Quick look at the futures.
LEE: Looking like a flat to slightly lower open for stocks. But we saw a very bullish session yesterday. The Dow, the S&P, the Nasdaq all in positive territory. In fact, that 53 point gain on the Nasdaq translates to a gain of 2.8 percent, meanwhile, the Dow up 1.2 percent, the S&P up 1.6.
Citigroup in focus today, one of the Dow 30 components, buying the consumer finance arm of Washington Mutual for $1.25 billion. So get ready to see another Citigroup branch, perhaps, around the corner near you. They are establishing more locations for things like auto and home equity loans -- Carol.
COSTELLO: A lot of profit in those interest rates.
Carrie Lee, live from the Nasdaq market site, many thanks.
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Employer>
Aired November 25, 2003 - 06:16 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Time now, though, for a little 'Business Buzz.' Companies are not paying more for health care costs, retirees are.
Carrie Lee has more on this story from the Nasdaq market site.
Not good for retirees, people on a fixed income.
CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: It certainly is not, Carol. And this probably comes to a surprise to some people. This is in today's "Wall Street Journal," because a lot of times companies do complain about rising health care costs cutting into their profitability. But when it comes to retirees, a new survey shows that over half of the large companies in this country, at least half of the large companies, including names like IBM and CSX, have actually established ceilings on the amount that they will spend each year on retirees. This according to a study from the Kaiser Family Foundation and Hewitt Associates. Once health care costs reach that ceiling, then the increases are passed along to retirees. And as a result, retirees are the ones that have -- who have seen their out-of- pocket costs rise in recent years.
Quick example here, IBM caps out at $3,500. This, again, cited in "The Journal." IBM spent on retiree health care last year -- the amount of money they spent fell 8.3 percent to $566 million. But the amount that IBM passed on to retirees spiraled 67 percent during that time. So when you hear companies talk about rising health care costs and that putting a crimp on their numbers, well when it comes to retirees, might not actually be true, Carol. This, again, according to "The Journal" today.
COSTELLO: Got you. Quick look at the futures.
LEE: Looking like a flat to slightly lower open for stocks. But we saw a very bullish session yesterday. The Dow, the S&P, the Nasdaq all in positive territory. In fact, that 53 point gain on the Nasdaq translates to a gain of 2.8 percent, meanwhile, the Dow up 1.2 percent, the S&P up 1.6.
Citigroup in focus today, one of the Dow 30 components, buying the consumer finance arm of Washington Mutual for $1.25 billion. So get ready to see another Citigroup branch, perhaps, around the corner near you. They are establishing more locations for things like auto and home equity loans -- Carol.
COSTELLO: A lot of profit in those interest rates.
Carrie Lee, live from the Nasdaq market site, many thanks.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Employer>
