Anxieties increase as retirees lose benefits

Whenever Sandra Skvara's heart starts to race for no apparent reason she tells herself, "OK, calm down."

Yet seeing a doctor is out of the question.

The 56-year-old substitute teacher hasn't visited a medical office once--not even for routine screenings--during the four years since she and her retired steelworker husband lost his employer-paid health insurance.

"It's scary," said Skvara, whose husband, Stephen, is disabled. "Until I reach Medicare age I won't have any health insurance because we cannot afford coverage for both me and him," and her husband needs it more.

The Indiana couple's struggles are typical of tens of thousands of retired steelworkers and spouses who have suffered inadequate care and financial setbacks after seeing their employer-paid medical benefits washed away. In their case, coverage lapsed when his former employer went bankrupt.

A new study of how such retirees have fared sheds light on the importance of health care coverage to older Americans, who tend to have higher medical costs and fewer options for replacing insurance. It also underscores the vulnerability of millions of retirees from troubled companies in the airline and auto industries who are at risk of losing benefits.

Even healthy companies with soaring medical costs are cutting retiree medical care.

"What we see with retired steelworkers may not be the exception," said Kaiser Family Foundation policy analyst Michelle Kitchman Strollo. "Health care security is crucial to people because without it, there's no income security."

Medical benefits, unlike pensions, generally are not guaranteed unless spelled out in a labor agreement. Even then, all bets are off when a company files bankruptcy because union contracts can be voided.

In the steel industry some 200,000 retirees and dependents lost their employer-paid health-care benefits in 2002 and 2003 following the bankruptcies of giants LTV Corp. and Bethlehem Steel.

One in four remained uninsured in 2004, according to a Kaiser study based on interviews with nearly 3,000 retirees and spouses.

Many reported being forced to cut back on necessities such as food and heat and cashing in "a lot" of their savings to pay for health care.

"When people did ultimately find insurance, it was not without undue stress and gaps in coverage," Strollo said.

Nearly half of those who were younger than 65 said they or their spouses were forced to go back to work after losing coverage, the study reported.

"The share who said they had to return to work to afford their health care was extremely surprising because this isn't necessarily a population that's retiring to kick back and play golf every day," Strollo said. "It's a very middle-class group of Americans who in many cases retired because of health conditions or because they're caring for somebody else in their family."

That was true for Stephen Skvara, 59, an electrical repairman who retired in 2000 after an auto accident left him with disabling hip and knee injuries. An active volunteer in his community and union, the United Steelworkers rep worked 34 years at LTV's Indiana Harbor Works in East Chicago.

Like many second- and third-generation steelworkers, he went to work straight out of high school because "you could make more money in the mills then than you could with a college degree," he recalled. "That's the way we did it in northwest Indiana."

His job paid for his family's three-bedroom house on a tree-lined street near Valparaiso, sent three of his four children through college and "provided a good life, everything everybody dreams about," he said.

Despite chronic health problems he headed into retirement never anticipating financial hardship. Then came two blows that drained his savings and dramatically altered his family's lifestyle.

First, his retirement stipends were cut by one-third, to $12,000 annually, when bankrupt LTV shifted its obligations to the federal agency that guarantees pensions. Then he lost the employer-paid insurance that covered most of his medical costs, including $6,000 worth of prescription drugs a year.

Because of his disability he qualified for Medicare and managed to buy a supplemental policy for $300 a month. Yet even with help from a union and industry trust fund that defrays his drug costs, he spends about $5,000 annually on health care--a huge bite from his reduced pension.

"We had the Cadillac of insurance before," he said. "Now I'm driving a Chevy, and the wife doesn't even have a Chevy. We keep sweating it out, hoping nothing happens. That weighs constantly on my mind."

Sandra Skvara went back to work as a substitute teacher, but her public school job offers no health insurance. Though she is prone to depression, treatment is not an option, she said. And she goes without screenings such as pap smears and mammograms.

The couple trims heating costs by dialing back their thermostat. They have stopped eating out and given up any thoughts about replacing Stephen Skvara's 20-year-old Oldsmobile Cutlass Sierra.

"Trips are out of the question," said Stephen Skvara.

He keeps busy counseling other retirees on their health-care options at the local union hall, where many are convinced from bitter experience that the nation's employer-paid system is irrevocably broken and needs to be overhauled.

"I'm worried about my kids and grandkids," he said.

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By Barbara Rose
Tribune staff reporter

berose@tribune.com

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