Federal health care subsidies will to go 29 N.C. companies

The (Raleigh) News & ObserverSeptember 1, 2010 

More than two dozen businesses and nonprofit groups in the state will receive federal health care subsidies to offset the cost of insuring their retirees.

The subsidies, announced Tuesday, are the first visible sign of the recently passed Affordable Care Act. The insurance subsidies were added to the new health care law to encourage employers not to cut or drop health benefits for their former workers - and to appease the business lobby's concern about the overhaul's effect on profits.

The 29 organizations selected in this state - which include city governments, universities and Fortune 500 corporations - are just the first wave of employers that hope to benefit from the program. They are among nearly 2,000 employers nationwide named so far that are vying to divide the $5billion pot.

Some employers passed up the opportunity, which required a time-consuming federal application without a guaranteed payout. The effort cost Duke University as much as $20,000 in time and labor, said Kyle Cavanaugh, Duke's vice president of human resources.

The applicants don't know how much money they will receive until they submit details on health costs later this year to the U.S. Department of Health and Human Services. Duke University estimates it could receive up to $1 million to help defray the cost of insuring more than 1,000 retirees.

"This allows us to continue to stand in line," Cavanaugh said. "The number was large enough for us to stay engaged and pursue it."

Nationwide, about 1.3 million retirees and dependents are still covered by employer insurance programs, according to the Employee Benefit Research Institute, a nonprofit in Washington. These people can be difficult to insure because of their age and high health care costs.

According to federal statistics, businesses were dropping those benefits even before the recession. Between 1998 and 2008, the percentage of large companies that offered the plan fell from 66 percent to 29 percent.

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