Like General Electric (GE) and other big companies, IBM and Time Warner have decided to stop purchasing health care insurance for retirees, and instead give those former employees yearly stipends they can spend to buy insurance on their own. Media coverage has focused on the idea of moving retirees onto private health care exchanges that offer a range of plans, similar to the way public exchanges set up under Obamacare will offer coverage.
But the more important precedent may be the move away from coverage purchased by the employer, to coverage purchased by workers. IBM and Time Warner retirees will be free to purchase whatever insurance they chose through a private exchange. If the plan they choose costs less than the stipend, they can keep the difference. If it costs more, they have to come up with the extra money themselves.