Without congressional action, retired coal workers could lose benefits by end of the year

Nov 14, 2016
Originally published on November 10, 2016 9:32 pm

Thousands of former coal workers and dependents who worked for now-bankrupt coal companies could lose their health insurance at the end of the year if Congress does not pass legislation to fund it.

Retirees in southern Illinois say losing their health insurance would amount to a broken promise from the coal companies that would have devastating effects to their well-being. Without Congressional action, Republican president-elect Donald Trump’s promise to repeal of the Affordable Care Act makes the retirees’ coverage alternatives uncertain.

Fifty years ago, many of the jobs in the small towns east of St. Louis were in the strip mines owned by Peabody Coal Company. Local 1148 of the United Mine Workers of America had more than 700 members in southern Illinois. Now, about a dozen retirees meet twice a month in the back room of the Pour House bar in Marissa, about 40 miles southeast of St. Louis.

“The biggest shovel, it was 20 stories tall … a lot of times you did a lot of climbing. We thought we were cool,” said Charles Lehman, a former welder from Sparta.

Lehman worked at Peabody’s River King Mine for 30 years. That job — well-paid, with medical benefits and a modest pension — took a toll on his body.  

“I had a lot of neck and spine trouble," Lehman said. "I’m not going to say I blame it on that, but it caught up with you." 

On an unseasonably warm evening in November, union representative Ronnie Huff told his colleagues that there is no contingency plan if they lose their health insurance. 

Because most of the retirees are on Medicare, losing their union insurance would mean they’d have to start paying a premium, find other coverage, or go without supplemental coverage.

“You know, if Christmas comes along and there’s no bill passed I’d go buy it," Huff said. "But I’d be looking for it before then, too.” 

Union local president Randy Phelps, 74, has had back surgery, open heart surgery, and two knees replaced. Without health insurance, he doesn't think he'd last long.

“I’d probably make it about three months. I take a bucket full of pills, I see a ton of doctors,” Phelps said. “It gets me from one door to the next.”

Why coal? Union cites 70-year-old agreement

The UWMA cites the Krug-Lewis Agreement of 1946 as evidence that the federal government has guaranteed health care to the coal industry. To end a mine worker strike after World War II, the Truman administration made a deal with national union leaders to establish a health and retirement fund. Though the contract was temporary, operating coal companies still pay into collective trust funds for their workers’ pensions and health insurance.  

As a young coal worker in the 1970s, Phelps acted as a union representative during contract negotiations with Peabody. He said health care was always non-negotiable.

“Coal mining is rough, dangerous, hard work. As far as coal dust, and diesel dust fumes and solvent fumes … with black lung,” Phelps said. “Everybody’s going to get it, at one time or another, something.”

Domestic demand for coal flattened in the early 2000s, and then fell with the rise of cheap natural gas and declines in the steel industry. In 2007, Peabody spun off Patriot Coal, a subsidiary for its operations in the eastern United States. But when Patriot filed for bankruptcy in 2012, the company was no longer required to pay for retiree health benefits and pensions.

To workers like Phelps, it felt like he and his colleagues were thrown under the bus.

“Other coal companies before them had done the same thing. So everybody could see what was going to happen,” Phelps said. “But that’s just the game they learned to play to get rid of everybody and get rid of all the liabilities.”

A withdrawn promise

Under U.S. bankruptcy law, many private-sector pensions are guaranteed by the federal government through the Pension Benefit Guaranty Corporation. But health care is not included, said Washington University bankruptcy law expert Dan Keating.

“Companies make these payments to retiree health benefits on a pay-as-you-go basis,” Keating said. “That works fine as long as the company is doing well and is solvent, but once the company runs into trouble, there’s no money that’s been set aside to keep these promises.”

In the case of coal, an entire industry ran into trouble. According to the UWMA, there are 12 retirees per active worker in the union today.

A bill under consideration by the U.S. Senate would fund the health insurance for about 22,000 former coal workers and their dependents who worked for companies that filed for bankruptcy in the past 10 years. The majority are former employees of Patriot Coal, whose benefits would otherwise run out on Jan. 1. Retirees from Alpha Natural Resources and Walter Energy would lose their benefits over the course of the year, according to a union representative. 

The measure also would add money to the union’s pension fund, which covers about 120,000 people and could become insolvent by 2022, the union said. 

Measure divides Republicans, coal state representatives  

Congress passed similar bailouts for coal worker benefits for previously bankrupted companies in 1992 and 2006. But during a hearing of the Senate Finance Committee in September, Republican U.S. Sen. Mike Enzi of Wyoming said he would not support the measure.

“Rather of addressing the thousands of underfunded pension plans, we’re considering one bill that helps one underfunded plan, and it does so at the expense of the U.S. taxpayer,” Enzi said.

The measure would be funded by transferring some of the interest generated by the Abandoned Mine Reclamation Fund, and receive supplemental payments from the U.S. Treasury. The Congressional Budget Office has not yet released a cost estimate.

To Enzi, this would set a “dangerous precedent.”

Support for the measure is coming from both sides of the aisle: Half of the bill’s 22 Senate cosponsors are Republican and 10 are Democrats, plus Bernie Sanders the independent from Vermont. But for it to pass, Senate Majority Leader Mitch McConnell, R-Ken., would have to agree to bring the legislation to the Senate floor for debate during a lame duck session of Congress.  

Follow Durrie on Twitter: @durrieB

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