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Starting next week, they'll be forced to find a way to pay for their medical benefits as a result of the bankrupt company's exodus.

Sunday, March 24, 2002

By Jim McKay and Pamela Gaynor, Post-Gazette Staff Writers

Carol McMahon takes seven different prescription drugs daily. One has a monthly price tag of $193, another $150. Add up the rest, ranging in price from $8 a month to $64, and the total monthly expense balloons to $513.

	Retired steelworker Frank Farkasovsky , of Ambridge, cannot hide his frustration at an informational health benefits meeting sponsored by SOAR ( an United Steelworkers retiree organization) at the Center Stage in Monaca. Farkasovsky worked at LTV Steeel for 37 years. (Martha Rial, Post-Gazette)

Until April 1, much of those costs had been picked up by insurance provided to her husband James as part of his retirement package from LTV Steel Co.'s Aliquippa mill, a nine-mile behemoth that shut down in the mid-1980s and has since been razed.

Like 80,000 other retirees and their dependents in the steel towns where LTV once operated, McMahon has for the past month been desperately searching for affordable insurance to replace programs that she will lose in just a week.

"A lot of us are very worried," McMahon said.

At least 12,000 LTV retirees and dependents live in the Pittsburgh region. They worked for LTV either at its plant in Aliquippa or at the former Pittsburgh Works, both now closed.

Their forced shopping spree for alternatives has opened their eyes about one thing: How good their old benefits were. "These folks are going from a Cadillac program to nothing," said Dr. Fred Hyde, chief executive officer of Aliquippa Community Hospital, which estimates it has 5,940 LTV retirees living in its service area, including 1,600 not yet eligible for Medicare.

With the approval of a bankruptcy judge, LTV stopped paying for health benefits for salaried retirees at the end of February. Former hourly workers got a month-long extension thanks to a union-negotiated fund called the Voluntary Employee Benefit Association, or VEBA. That fund ends next Sunday.

"All our lives we had the best policy," said James Gianella, who was forced to retire from LTV in 1998 when the Hazelwood coke plant closed. "But we worked hard. We worked in coke ovens. There was benzene there, sulfuric acid. It was a chemical plant."

The loss of paid health-care benefits will create a huge hole in the budgets of retirees who by and large live on fixed incomes, said Cary Burnell, a researcher for the United Steelworkers union in Washington.

"Disaster is really the way to describe it," Burnell said. "It's not Sept. 11, but for these people, it's a disaster."

James Gianella, third from left,of Carrick, who worked in LTV's coke plant in Hazelwood, talks to Sandy Trioa, Director of Individual products for Highmark Blue Cross Blue about health care insurance options for retirees of LTV Steel. (Bill Wade, Post-Gazette)

The search for replacement benefits is frightening and confusing for many of the retirees, who had assumed their health-care needs were covered for life through wage and benefit packages negotiated by the union prior to LTV's liquidation.

Health-care providers, union officers and politicians have been inundated with calls from retirees seeking help. Informational meetings in Pittsburgh and Beaver County organized by a United Steelworkers retiree organization attracted so many people that hundreds were turned away in each location for lack of space.

"I've spent so many hours on the telephone," said Mary Jo Goldstrohm, whose husband Gary, an LTV retiree from Pittsburgh, recently suffered a stroke and must also take expensive anti-rejection drugs for a kidney transplant. "The stress of this is unbelievable."

Retirees are angry at the company, the union and the government for failing them. They sense little sympathy among the public for their plight, perhaps because of the reputation -- deserved or not -- that they were among the world's highest-paid industrial workers with the best of benefits.

Steel retirees don't all live high on the hog. The union, using figures from one large integrated producer, calculates that about half of its retirees receive pensions ranging from $500 to $900 a month, with exceptions on both ends of the scale.

On the higher end, about a fifth of the retirees receive monthly pensions of $1,300 or more. On the lower end, 17 percent receive less than $500 monthly and nearly all surviving spouses, mostly elderly widows, are paid less than $200 a month.

Rosalee Melgari, a widow of an LTV Pittsburgh retiree, is in her 80s and receives a monthly pension of just $117.60. She is most concerned about the costs of prescription drugs she takes for a heart condition that are not covered by Medicare. She's considered just not taking them when the insurance coverage stops.

"I'm not sure what I'll do," she said, her voice weakening as she spoke. "We live a long time but our life is not a good one."

While neither LTV nor the USW would estimate how much was spent on average for health-care coverage for each employee, the amounts that retirees would have to pay under a federally-mandated program called COBRA suggested what the price would be.

The least expensive COBRA plan for a single retiree from Western Pennsylvania who is not Medicare eligible would be about $351 a month, according to the USW. The most expensive would be about $580 a month. Family coverage would be roughly double those amounts, exceeding $1,000 a month in some cases.

Under COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1985, most employers with group health plans must offer terminated employees the opportunity to temporarily buy coverage under the employer's plan with a 2 percent administrative markup. LTV will offer COBRA until its Pittsburgh-based Copperweld unit is sold, probably later this year.

The company-sponsored plans the retirees are losing were not completely paid for by LTV. Retirees shouldered from 15 percent to 20 percent of the total expense through a combination of monthly premiums, deductibles, co-payments and co-insurance, according to the union.

Now, they'll be paying for all of the coverage they get -- a particular hardship for those not yet eligible for Medicare.

	Related Info Retiree health-care options to be discussed at meetings Information on health insurance options will be made available to LTV Steel retirees this week at locations in Allegheny and Beaver counties. Tomorrow, insurance providers will set up booths and provide counseling to LTV retirees at the South Side campus of the International Brotherhood of Electrical Workers Local 5, at 5 Hot Metal Street. Doors to the conference will be open from 9 a.m. to 4 p.m. A similar session will be held Wednesday for retirees from the Aliquippa area. That meeting will be held at the Center Stage, 1495 Old Brodhead Road, Monaca, also from 9 a.m. to 4 p.m. Loss of LTV benefits to hurt hospitals, too

Carol McMahon, for example, is shopping for coverage for her Medicare-eligible husband and herself. Together, they have an annual income of $19,900 and at 61, she is ineligible for Medicare and restricted from some plans because of medical history.

"I could get a job, but where am I going to work?" asked McMahon, a homemaker for most of her adult life. "I have no education like the young girls today. I'd have to scrub floors or work in a McDonald's."

Charles Inlander, president of the People's Medical Society, a consumer advocacy group based in Allentown, said those retirees or dependents who are under 65 will have the most trouble finding affordable coverage. Their choices are expensive and limited.

The Keystone Blue HMO, a typical Highmark Inc. health plan for people with no chronic health conditions, would cost $296 a month for a single retiree ranging in age from 55 through 59 and $332 for one 60 through 64. A husband and wife in the same age groups would pay $592 or $663 a month. Add two children and the bill would go to $860 or $932.

But entrance is not assured even at those prices. Keystone Blue is medically underwritten, meaning applicants must provide a truthful medical history and may be turned down. Pre-existing conditions are excluded for one year.

Robert Bartek, 57, an LTV retiree who works part-time as a school janitor, worries that his heart condition will bar him from coverage. He's been in a hospital three times in the past year and takes a fistful of medicines daily.

"I'm really up the creek," he said. "I've got to have something with prescription coverage. I just won't live without it."

For Bartek and others under 65 with chronic health problems, there may be only one option: Highmark's Preferred Benefits plan, the form of coverage the company offers as Pennsylvania's insurer of last resort.

There are several variations of the Preferred Benefits plan, but one that includes coverage for physician, hospital and prescription bills costs $455 a month for a single retiree and carries a $750 deductible and co-insurance payments representing 20 percent of the cost of care and prescription drugs. Coverage for a husband and wife would cost $925 a month. Add two children and the bill reaches $963.40.

Highmark offers low-income programs as well. One called SpecialCare would cost $75.90 monthly for an individual with an income of $16,391 or below and $151.90 for a couple with annual income of $22,089. Prescriptions are not included but a drug discount card is provided.

Medicare beneficiaries will have more options available, but all will leave them with more out-of-pocket expense than they had under the Medicare HMO options and so-called Medigap supplemental coverage -- additional benefits beyond Medicare -- that LTV offered. And there is no plan that comes anywhere close to providing the unlimited prescription benefits available under LTV's Medigap plan.

Those who choose nongroup Medicare HMOs will have to bear monthly premiums that previously were covered by LTV. The least expensive monthly premiums among Medicare HMOs operating in the region is $9 for a UPMC Health Plan option offering no prescription benefits.

Premiums for any prescription coverage start at $35 a month for Health America's Advantra Plan, which limits members to $1,000 worth of prescription benefits a year. Monthly premiums for plans that afford prescription coverage of $350 per quarter or $1,400 a year -- the maximum available among the region's Medicare HMOs -- range from $58 to $90.

Highmark is offering a group version of its Security Blue Medicare HMO to LTV retirees under the auspices of the Steelworkers Health and Welfare Fund. Premiums start at $55 a month with prescription benefit coverage of up to $250 a quarter.

Many individuals who had no post-retirement benefits such as LTV's have turned to Medicare HMOs in recent years because the cost of Medigap supplements became prohibitive. Those who are losing LTV's Medigap supplement are just realizing that.

Dorothy Berger, 81, and her husband, a 91-year old LTV retiree, had been paying $268 a month for a company sponsored Medigap plan that covered both of them. That seemed steep compared with the Medicare HMOs LTV also offered. But to them, it was worth it because of the six prescriptions he requires and the one she needs. Under the plan, prescription benefits were unlimited and co-pays were $5 for 90-day supplies of brand-name drugs and $2 for generics, she said.

By comparison, a Medigap J plan, the highest option supplement available to individuals, caps prescription drug coverage at $3,000 annually and the beneficiary must pay 50 percent of that cost, said Burnell, the USW researcher. That plan would cost between $189 and $240 a month per individual for someone who is only 65 and in good health, Burnell said. For older retirees or those with chronic health conditions, the costs are much higher.

Hundreds of retired and laid off LTV steel workers line up for an informational health benefits meeting sponsored by a United Steelworkers retiree organization at Center Stage in Monaca earlier this month. (Martha Rial, Post-Gazette)

After much consideration, Berger chose a version of the Highmark Security Blue HMO for a $73 monthly premium per customer that provides $350 in prescription coverage every three months. She's also turning to the Department of Veterans Affairs for additional help with her husband's prescription needs.

LTV is the most visible example of a huge problem the steel industry is having in funding benefits for retirees with roots in the restructuring that wiped much of Pittsburgh's industry off the map in the 1980s.

Major steel companies have promised an estimated $12 billion more in retirement benefits than they have set aside money to cover them -- and, with dozens of companies in bankruptcy court, those promises may not all be met.

Approximately 600,000 retirees and dependents rely on the domestic steel industry for health-care benefits today. About 115,000 of them live in Pennsylvania, the state with the largest number, followed by Ohio with 56,000, Indiana, 45,000 and Illinois, 30,000.

The health-care costs are high in part because a significant number of current retirees were forced out of work at a young age due to plant shutdowns or permanent disabilities. Because their careers were cut short, many were under 65.

There is only one active worker for every three retirees in the average domestic steel company, nearly triple the rate of most other major basic manufacturing industries. U.S. Steel, for example, had 19,353 domestic employees at the end of 2000 and 94,339 retirees.

"A lot of people forget that when we negotiated these contracts years ago, we didn't have the ratio of retirees to active workers that we have now," said John Todorich, a USW staff representative in Beaver County. "The whole deal turned around."

The steel workers union and some of the industry's biggest companies are asking Congress to help fund those benefits, perhaps with money from the tariffs President Bush recently imposed on imports found to be violating trade laws.

The huge liability of retiree benefits has been a major impediment to the consolidation that analysts believe the industry desperately needs to regain its financial footing. U.S. Steel, one of the few domestic producers strong enough to acquire ailing competitors, is willing to take a lead role in consolidation through mergers but only if the government helps pick up retiree costs.

Steel workers also are turning to Harrisburg for help. Last week, a group of Democratic state lawmakers unveiled a bill that would pick up benefit costs for LTV retirees using funds from the tobacco settlement. The bill, however, is expected to receive a chilly welcome from Republicans who control both the House and Senate.

"I do believe the government should do something. There are too many people hurting," said Aliquippa retiree Elmer Gillin, who qualifies for Medicare but worries about coverage for his wife, who has heart problems and Parkinson's disease.

"Me, I have enough gumption that I'll probably make it. But it's going to be hard."