Appalachia Today: Part 11 – Pensions, Health and Welfare Plans

Photo: A picket sign made by miners striking against the Brookside Mine Company in Kentucky. The months-long strike was violent, and ended when a man was shot and killed on the picket line. (Source: Jack Corn)

Pensions adequate to support retired miners was a long held goal of the major union in Appalachia, the United Mine Worker of America (UMWA.) The UMWA was the first labor union in this country to negotiate retirement and health benefits for its members, and through the historic 1946 Krug-Lewis agreement and subsequent collective bargaining agreements, UMWA members were promised both access to good health care and adequate pensions in their retirement.

Pursuant to the collective bargaining agreements, the United Mine Workers of America Health and Retirement Funds (UMWA H. & R. Funds) was established in 1947 to administer pensions and health care benefits to mining retirees. Today, the Fund provides over $613 million to about 120,000 retired miners and families in the form of pensions and medical care.[i] [ii] This contrasts sharply with the pensions offered by state governments, such as the state of Kentucky, which in FY 2015 spent only about $100 million on retirement benefits for the entire state (West Virginia spent about $390 million).[iii]

However, the UMWA pension and health care benefits are now in severe jeopardy. Many coal companies which funded the pensions through periodic payments have declared bankruptcy. These bankruptcies endanger the pensions and health care benefits of retired UMWA miners since bankruptcy courts often allow coal companies to invalidate collective bargaining agreements and suspend the pension and health care benefits.[iv] [v]

For example, in July 2016 the US Bankruptcy Court in Richmond, VA confirmed Chapter 11 bankruptcy for Alpha Natural Resources and stripped away the company’s obligations to pay pensions and health care benefits to its 4,500 retirees and, in addition decided making an additional 6,670 current employees ineligible for the benefits.[vi] [vii] [viii]

A Retired UMWA Miner


Photo:
Retired coal miner Ed Austin with some of his 20 children in Fireco, West Virginia, near Beckley. The 64-year-old worked in the mines from 1925 to 1956. He receives black lung payments and a United Mine Workers pension. (Source: Jack Corn)

Coal companies also have developed sophisticated strategies to rid themselves of pension responsibilities prior to actual bankruptcy. In 2007, two of the nation’s largest coal companies, Peabody Energy and Arch Coal, created a new company, Patriot Coal, which in the Union’s view was in order to escape their retiree healthcare obligations which they had inherited from unionized mines in Kentucky and West Virginia.[ix] The UMWA believed that the new company was created to fail and by failing, eliminate in bankruptcy the big companies’ liabilities.[x] The UMWA prediction proved to be correct and by 2012, Patriot Coal had amassed total outstanding liabilities of $1.37 billion.[xi] In 2013, Patriot filed for Chapter 11 bankruptcy and won court approval of its proposal to reduce pensions and benefits to its 13,000 unionized workers and retirees.[xii]

Patriot filed for bankruptcy again in 2015 and this time its assets were auctioned off with most of the meagre proceeds used to pay off the legal fees associated with its bankruptcy instead of funding pensions. For example, Alcoa agreed to pay $22 million to assume the healthcare obligations for the Squaw Creek miners (Indiana) because of Patriot’s bankruptcy, yet $18 million of this payment went to cover legal costs, $1 million went to pay former mine managers, with only $3 million going towards coal miners benefits.[xiii] “It’s just a hard pill to swallow. I mean, all those years, it was a promise, and through bankruptcy, everything’s thrown away.” said 61-year-old Dave Vansickle who worked underground for 40 years.[xiv]

In 1992, the Congress enacted the Coal Industry Retiree Health Benefit Act to address the problem of orphan retirees (retirees abandoned by employers or without a surviving employer). For decades the fund has been financed by the interest from fees coal companies were paying to reclaim abandoned mines and since 2006, at a level of by $490 million per year in taxpayer money.[xv] [xvi] The UMWA has proposed the Miners Protection Act[xvii] to put more retirees within the federal safety net – $3 billion over the next 10 years for approximately 89,000 UMWA members nationwide.[xviii] The bill has 54 co-sponsors but is still awaiting a hearing in the House. The prospects are not promising and in October 2016, 12,500 union members were notified that, because of a funding shortfall, certain retirement benefits would end on December 31.[xix] In March, 2017, a healthcare cut-off notice was mailed to about 22,600 retired coal miners and widows informing them that their benefits will end by of April 30th, 2017.[xx]

Another Retired Union Miner


Photo
: J.l. Bolen, 74, a blind, retired coal miner is accompanied on a walk for fresh air by his wife in Besoco, West Virginia, near Beckley. He also likes to walk at night. Bolen was born in Besoco, named for the coal company that used to mine there. He started in the mines at age 14, and now gets black lung benefits as well as a united mine workers pension. (Source: Jack Corn)

Without further federal intervention, the loss of pension and healthcare benefits will further devastate thousands of families in Appalachian coal towns. “They will now have to begin contemplating whether to continue to get medicines and treatments they need to live or to buy groceries,” said UMWA President Cecil Roberts, “They will now have to wonder whether to go see a doctor for black lung or cancer or pay the mortgage.”[xxi]

Former miner Paul Eubank who mined in West Virginia for 32 years currently receives roughly $2,800 every month from his union pension and Social Security. He’s been suffering from back pain and his union health plan covers most of his family’s medical costs, without which his healthcare cost could run up to $800 a month for doctor’s visits and prescription drugs. “We have our house payment, we have homeowner’s insurance to pay, we have property taxes to pay, we have vehicle payments to pay, and we have living expenses like food, clothing, our heating bill…we can’t afford health care.” said Eubank.

Another retired miner, 76-year-old John Wallace who worked for Peabody for 33 years and now suffers from obstructive pulmonary disease and was treated for esophageal cancer estimated that without union health care benefits, his prescription drug costs could go from $800 a year to more than $3,000.[xxii] Retired miners in Pennsylvania and West Virginia alone account for nearly half of UMWA’s pension fund. Dave Vansickle told NPR, “what a lot of people don’t realize – there was so many coal miners in this area that if this legislation doesn’t get passed, these people aren’t going to have the money to spend. It will actually destroy communities.”[xxiii] [xxiv]

[i] http://umwa.org/for-members/pensions-retiree-info/

[ii] https://www.washingtonpost.com/news/wonk/wp/2016/02/09/a-huge-coal-miners-pension-plan-is-on-the-brink-of-failure-one-senator-is-blocking-a-fix/?utm_term=.b93fbc971d1f

[iii] http://umwa.org/for-members/pensions-retiree-info/umwa-health-retirement-funds-community-expenditures/

[iv] http://www.thedailybeast.com/articles/2015/10/01/the-plot-to-make-retired-coal-miners-broke.html

[v] https://www.bna.com/coal-company-okd-n57982065666/

[vi] https://www.wsj.com/articles/judge-approves-alpha-natural-resources-restructuring-plan-1467920639

[vii] http://www.heraldcourier.com/news/local/alpha-natural-resources-bankruptcy-final-moving-out/article_986f5b48-a567-51bc-bde6-444a5e1045cf.html

[viii] https://www.forbes.com/sites/kensilverstein/2016/08/16/health-and-pension-benefits-to-coal-retirees-are-hampered-by-disabled-companies-and-dirty-politics/#317ba3996765

[ix] http://inthesetimes.com/working/entry/14360/in_the_coal_fields_a_novel_way_to_get_rid_of_pensions_is_born/

[x] http://inthesetimes.com/working/entry/14360/in_the_coal_fields_a_novel_way_to_get_rid_of_pensions_is_born/

[xi] http://www.thedailybeast.com/articles/2015/10/01/the-plot-to-make-retired-coal-miners-broke.html

[xii] https://www.bloomberg.com/news/articles/2013-05-29/patriot-coal-wins-approval-to-cut-retiree-pensions-benefits-1-

[xiii] http://www.thedailybeast.com/articles/2015/10/01/the-plot-to-make-retired-coal-miners-broke.html

[xiv] http://www.npr.org/2017/02/25/517181428/benefits-in-jeopardy-for-retired-coal-miners

[xv] http://umwa.org/for-members/pensions-retiree-info/coal-act/

[xvi] http://www.thedailybeast.com/articles/2015/10/01/the-plot-to-make-retired-coal-miners-broke.html

[xvii] http://www.npr.org/sections/health-shots/2016/12/08/504823965/retired-coal-miners-at-risk-of-losing-promised-health-coverage-and-pensions

[xviii] http://powersource.post-gazette.com/business/career-workplace/2016/12/07/Showdown-in-Washington-over-coal-miner-benefits-enters-final-days/stories/201612070169

[xix] http://www.motherjones.com/environment/2016/10/umwa-retirement-pensions-health-care

[xx] http://www.herald-dispatch.com/news/retired-miners-widows-get-health-care-cut-off-notices/article_68b3b591-317c-5766-8334-a47cd53ef339.html

[xxi] http://www.herald-dispatch.com/news/retired-miners-widows-get-health-care-cut-off-notices/article_68b3b591-317c-5766-8334-a47cd53ef339.html

[xxii] https://www.washingtonpost.com/news/powerpost/wp/2016/11/29/donald-trump-says-he-wants-to-help-miners-but-does-congress/?utm_term=.c7216a157f8b

[xxiii] http://www.npr.org/2017/02/25/517181428/benefits-in-jeopardy-for-retired-coal-miners

[xxiv] Apart from government aid, many private charities send money, volunteers, free medical care and truckloads of donated food and clothes to the Appalachian region. Charities have also been contributing to combat poverty in the Appalachian region. For example, the Calvert Foundation has raised over $15 million to support local small business, and the Appalachia Funders Network gathered 80 public and private grantmakers to invest in the region and increase national interest in doing so.[xxiv] However, the help from the non-government sector failed to meet the need. The Appalachia Service Project, for example, spent $6.4 million in 2012 to improve housing in the Appalachian Mountains, yet the demand for housing was so great that only one in more than 100 homeowners who applied for assistance can actually get help from the ASP.[xxiv] Some believe that the avalanche of government aid inoculates the region against effective charitable assistance, and charity workers find it hard to compete with no-string-attached federal money, where it was all too easy to reject any true reform or initiative. The local residents are often all too happy to let private volunteers do repair work they’re perfectly capable of performing themselves – sometimes leaving homes in disrepair until the annual summer influx of college students.