Washington, DC (WorkersCompensation.com) – While incidents of black lung disease are on the rise, a new report from the Government Accounting Office (GAO) indicates that financing for the fund that pays benefits to miners and their dependents could be in trouble should a new tax cut go into effect.
But mining advocates say the taxes coal companies pay into the fund are enough to pay for the benefits and administration of the fund, and will continue to be even with a tax cut.
In May, the GAO released an examination of the Black Lung Trust Fund and found that the fund could face billions in deficit by 2050 due to declines in coal production, and a reduction in a tax coal companies pay into the fund.
Black lung disease, or coal worker’s pneumoconiosis, is a disease caused by inhaling coal dust. The Black Lung Trust Fund was created in 1969 to pay for monthly wages and for medical treatments to coal miners who are totally disabled from pneumoconiosis that developed as a result of their work in and around mines. The fund also pays monthly wages to surviving dependents. Currently wages range from $650 to $1,300 a month, while medical care averages about $6,980 per miner.
In 2017, the study said, the fund paid out about $450 million in benefits to coal miners and their families, but the fund borrowed about $1.3 billion from the Department of the Treasury to cover debt repayment.
The report said the fund has borrowed money from the general fund nearly every year since 1979 because costs consistently exceed revenue. But the fund’s health is in even greater peril due to a scheduled tax cut that would reduce the tax coal companies pay to support the fund by about 55 percent, the report said.
Currently, coal companies pay about $1.10 per ton on underground production, which pays to support the fund. In 2019, the tax would revert to 50 cents, a rate levied in 1977.
According to the GAO, the program’s debt could rise to $15 billion.
One solution recommended by the organization would be to maintain the current tax rate and forgive $2.4 billion in debt to balance the fund by 2050.
Rep. Bobby Scott (D-VA), who requested the GAO look into the fund and is the ranking member on the House Committee on Education and the Workforce, said the tax cut should be eliminated.
“If we fail to at least extend the current tax rate on coal before it sunsets at the end of this year, the Fund’s debt will spiral out of control and inevitably force taxpayers to cover the cost,” he said in a statement.
Part of the cause is a rise in cases of black lung in miners whose careers started after 1969.
“You have to address the fact that the serious forms of black lung appear to be increasing and that may put even more strain on the trust fund,” he said, according to NPR. “The last thing you want to do … is to reduce the revenue. That will inevitably … put pressure on the idea that we should reduce the little benefits that they have.”
According to NPR, the GAO’s projections do not take into account studies that show record-high rates of progressive massive fibrosis, the advanced stage of black lung, or the increase in lung transplants due to black lung. A study by the National Institute for Occupational Safety and Health found that the transplant rate for miners with black lung has tripled in recent years, and that each lung transplant costs on average approximately $1 million.
But the National Mining Association said the revenues to the fund cover its expenses and that the solution should come from examining policy changes instead of increased costs for the coal companies.
“We see no reason for any tax increase given that revenues from the coal tax are more than sufficient to fund benefit payments and the administration of the fund — and will continue to be at the new rate that is planned for January 1, 2019,” Ashley Burke, spokeswoman for the National Mining Association said in an interview with WorkersCompensation.com.
“The program has been reengineered multiple times to maximize payments to claimants — whether or not claimants are properly entitled. Not only did Congress liberalize the medical criteria used to determine eligibility, but it added a new presumption of eligibility based on coal mine employment of 15 years or more.”
Coal companies purchase insurance for black lung disease in their miners, and they are held responsible for paying miners’ benefits when a miner contracts black lung. But because companies fail to get enough insurance, or file for bankruptcy, the companies ended up paying only 25 percent of benefits to black lung victims in 2017.
Lowering the tax rate lets coal companies off the hook, according to miner advocates.
Phil Smith, director of governmental affairs for the United Mine Workers of America referred requests for comment to a statement from Cecil E. Roberts, international president for the organization.
“The modest benefits paid to Black Lung victims or their widows are small compensation for the constant pain and suffering caused by this disease,” Roberts said in the statement. “These workers contracted this always-fatal occupational disease because they went to work in coal mines whose operators did not take the necessary steps to properly protect them.”
Roberts said miners get the disease because of the illegal operation of the mines.
“Coal operators caused this problem, and they are the ones who should be responsible for funding the compensation these workers receive,” Roberts said. “Letting them off the hook by reducing the amount they are required to pay is not just wrong, it is rewarding bad corporate behavior.”