My FIL has been watching CBS thin-slice their retiree health-care salami. Now companies are starting to go the defined-contribution route:
"The nation's pension crisis, it turns out, is only the second-largest long-term liability facing U.S. businesses. Far greater are underfunded health-insurance promises to current and future retirees. The companies that make up the Standard & Poor's 500-stock index are an astonishing $321 billion shy of what they need... By yearend the Financial Accounting Standards Board is likely to require companies to put this liability on their balance sheets, a step that could shrink shareholder equity by as much as 9%.
Many companies have been trimming those costs by dumping retiree health care entirely. In 1993, 40% of large employers offered such benefits to those over 65. By 2005 just 21% did...
A small but growing number of companies are trying one new approach: transforming retiree insurance into a 401(k)-type perk.
About 5% of employers who offer benefits have switched to such defined-contribution accounts, including DaimlerChrysler, which will move managers and other nonunion workers into one in 2007. An additional 13% have simply capped yearly retiree health spending."