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RETIREE HEALTH COVERAGE
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About one in four Medicare beneficiaries has prescription drug coverage through their retiree health plan.
These employer-based plans offer decent, affordable coverage.
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Firms offering retiree health coverage have declined by 25 percent in the last four
years.14 Retiree health coverage is declining substantially because
many firms previously providing it are opting to drop their coverage.
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The decline was more pronounced among the largest employers (greater than 5,000 employees), over a third of
whom dropped coverage in this period.
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Most serious effect will occur when the baby boom generation retires. Although there are employers who are
dropping health coverage for current retirees, most are restricting coverage for future retirees. This means that
the access problems that are emerging now could be more severe in the future.
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Firms are increasingly moving their retirees to Medicare managed care. To help constrain costs, a number of
employers are providing incentives for their retirees to join managed care. The number of large employers
offering Medicare managed care plans rose from 7 percent in 1993 to 38 percent in
1996.15
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