Posted on 07/23/2002 10:42:32 AM PDT by FourPeas
Steelcase drops dental coverage for its retirees
Tuesday, July 23, 2002By Rob Kirkbride
The Grand Rapids Press
Like a toothache that will not go away, rising health-care costs and slumping office-furniture sales are forcing Steelcase Inc. to make deep cuts in retirement benefits. Among the most significant is the elimination of dental coverage for the 2,400 retirees.
The Grand Rapids-based company mailed letters Monday to current and former employees explaining the move, expected to save at least $9 million a year from the company's annual $30 million health-care budget for retirees.
Steelcase also is increasing medical-care deductibles from the $50 to $200 retirees now pay to $500. Future employees hired by the company will not be eligible for any health-care coverage upon retirement.
The cuts are effective March 1.
Dick Molter, who retired in July 2000 from the computer-furniture division, said the move is another example of how the office-furniture giant's once-sterling reputation as a plum West Michigan job has been tarnished by layoffs and cost-cutting.
"Steelcase has kind of lost that name of fame the last couple of years," the 32-year employee said.
Molter said the loss of dental coverage is distressing, but he is more concerned that further cuts could eat into retirees' medical benefits. The 55-year-old Kentwood resident suffers from heart disease.
"Health-care benefits are something I believe we honestly earned," Molter said.
Steelcase's move places it closer to competitors and other employers.
Neither Holland-based Haworth Inc. nor Zeeland-based Herman Miller Inc. offer dental coverage for retirees.
Only 34 percent of employers offer health benefits to retirees, and fewer than half of those offer dental care, according to International Foundation of Employee Benefit Plans.
The steps are painful but necessary to keep up with rising health-care costs, said Nancy Hickey, a senior vice president at Steelcase.
"I don't know what we are going to do -- as a country -- to pay for medical costs," she said. "Health care is an issue that continues be more difficult every year.
"I'm sure there are going to be a lot of Steelcase retirees getting their teeth cleaned between now and March."
Dr. Richard Held hopes so.
Many current and former Steelcase employees visit his office on Kalamazoo Avenue SE, south of 52nd Street and two miles from the company's headquarters.
Although dentist offices like his could be hurt, he said the retirees will feel the brunt of the financial burden. "People are accustomed to a certain level of care and coverage, and when you take it away, you strip them of some sense of security."
Held said retiree dental coverage is rare, and corporate thrift is stripping services.
"A lot of people are being forced to pay greater co-pays or they are given no options by being forced into managed care," he said, describing a system in which patients can visit a "pool" of dentists, but not pick an individual.
The spike in health-care coverage is a disturbing trend for companies trying to offer medical care for retirees while building profit.
According to the employee memo from Steelcase President and Chief Executive Officer James Hackett, the company's annual cost for retiree medical benefits rose from $12 million to $26 million over 10 years. That figure is expected to increase to $34 million by 2004.
"And if our health-care inflation continues at its current pace, our annual bill for health care may exceed profits the business can produce," Hackett said in the memo.
Health care is in a state of upheaval, said Bob Stephan, chairman and chief executive of Secureone Benefit Administrators Inc., a Grand Rapids-based health insurance provider.
He said West Michigan businesses are struggling to keep up.
"Many companies are having a real hard time with the cost of insurance," he said. "And the problem is the employer doesn't have any control over it at all."
The rise in prescription drugs is forcing a shift toward higher co-pays, Stephan said. Worse yet, "nobody has the answer," he said.
Buying individual dental insurance is not cost-effective, Stephan said, adding Steelcase retirees are better off budgeting for teeth cleaning and the occasional cavity.
Steelcase is trying to create company-funded investment accounts that will help employees pay their health-care expenses in retirement. The plan is stalled while the government reviews the tax implications, but Hackett said the company is "committed to trying to bring this idea to completion."
If only we had listened to Hillary everything would be O.K. now. </sarcasm>
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