Were the new hires in the exact same position that you vacated? Do they recieve the same benefits? etc.
Yes and no, is the simple answer. Yes an employer can eliminate a position, but still hire others at different positions. For example, an employer may eliminate payroll positions, but still need to hire more people for sales jobs.
If you're employer eliminated your position and then hired someone else in the same position at a lower benifit level to safe costs, then no, he can't do that.