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Financial Management: Combined Fund Analysis

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Report Type Reports and Testimonies
Report Date Aug. 7, 1995
Report No. HEHS-95-230R
Subject
Summary:

Pursuant to a congressional request, GAO reviewed two studies of the United Mine Workers of America (UMWA) Combined Benefit Fund. GAO noted that: (1) the consultants' models projected widely differing financial results for the UMWA Combined Benefit Fund; (2) the models' expense estimates for 1995 differed by about $16 million; (3) one of the models underestimated the UMWA fund's 1995 net expenses by approximately $3 million; (4) one consultant based its medical cost inflation assumptions on the Fund's past and current efforts to contain cost growth in prescription drugs; (6) the other consultant relied on the Medicare trust fund's projections of medical inflation and adjusted these estimates to reflect the Fund's past experiences; and (7) the later assumptions may be more reasonable and may be more accurate in predicting the Fund's status beyond 1995.

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