The Honorable John McHugh
United States House of Representatives
2366 Rayburn House Office Building
Washington, DC 20515

Dear Representative McHugh:

Business Roundtable commends you on the introduction of H.R. 6288, the “Retiree Health Account Act of 2008.” Business Roundtable is an association of chief executive officers of leading U.S. companies with over $4.5 trillion in annual revenues and more than 10 million employees. Counting employees and their families, Business Roundtable companies provide health care coverage to more than 35 million Americans.

The new savings accounts created under your legislation would provide a better, more flexible way for Americans to prepare for out-of-pocket health expenses that they will confront when they stop working. These expenses include health insurance premiums, prescription drug costs, deductibles, co-pays and long-term care needs.

This legislation is important in raising the awareness of one of the greatest unmet retirement needs – the financing of retiree health care costs. Many Americans do not fully understand or prepare for the medical expenses they are likely to encounter after they retire. Early retirees often bear the full burden of escalating health insurance premiums. Medicare only covers certain health care expenditures but has high coinsurance and deductible costs and there is no coverage for long-term care. Some incorrectly believe that Medicare will cover all of their health and long-term care costs once they become eligible. Others greatly underestimate the cumulative costs they will face over long periods of retirement. It is critical that Americans begin to prepare for these expenses as an integral part of the retirement planning process.

The inadequacy of saving for retiree health expenses has not received enough attention by policymakers. Your bill is an outstanding addition to that important debate. Building on the proven-effective 401(k) and IRA models, your proposals add a new dimension that could make a major difference in the lives of Americans for years to come.

We appreciate your leadership and look forward to assisting you and your colleagues in crafting workable solutions that will help families better prepare for health expenses in retirement. 

Sincerely,
John J. Castellani