Let History Be a Lesson - an Asbestos Trust Fund Won't Work
by Ethan Early - January 6, 2006
Senator Arlen Specter (R) of Pennsylvania has proposed a $140 billion trust fund solution to asbestos litigation, which may voted on the floor of the United States Senate in January or February of 2006. While Senator Specter's motives may be noble, his solution only creates more problems than currently exist, and his solution is fatally flawed. Senator Specter's desire to pass this asbestos legislation has trumped his rationality on the topic. Thousands upon thousands of claimants will be denied compensation they deserve, many businesses will be hurt or destroyed, and taxpayers may be forced to pick up the tab as the trust fund approach crumbles under the weight of its numerous and significant problems.
Recently, in light of the asbestos trust fund approach, the United States Government Accountability Office ("GAO") reviewed four federal compensation programs designed to compensate individuals injured due to exposure to harmful substances- black lung, vaccine injury, radiation exposure, energy employees occupational illness- and determined the following:
the compensation programs have seen an expanded federal role and higher costs over time;
all four programs have been expanded to provide additional categories of claimants, cover more medical conditions, or provide additional benefits;
some programs have been extended longer than planned;
there have been far more claims than estimated for each program;
there have been significant delays in completing claims for victims; and
it took at least 2 years for all four programs to become fully operational.
Extrapolating the GAO information, it is clear that the asbestos trust fund won't work because it already exhibits many of the flaws which have befallen these previous federal compensation schemes, even assuming that a new federal bureaucracy runs smoothly! For example:
a study places the cost to adequately cover the trust fund as high as $561 billion;
the Congressional Budget Office acknowledges that resources may be insufficient to pay all claims and the trust fund will have to borrow billions of dollars over the first ten years to pay qualified claims;
it is predicted that many more claimants will file for benefits because it is seemingly easier than engaging in litigation; and
the trust fund will be mired in litigation over its constitutionality from its very first day of enactment, thereby delaying its start-up.
Ultimately, the GAO warning that policymakers must consider the costs of establishing a federal compensation program in times of serious federal deficits, coupled with valid concerns by claimants, insurers, and many business, set forth that this asbestos trust fund is fatally flawed and doomed to fail, thereby leaving claimants, many businesses and federal tax payers either out in the cold or on the hook.