ObamaCare Slams Employers, Retirees
Withdrawal of tax breaks for drug coverage for retirees is hitting some companies hard:
A Credit Suisse report estimates that S&P 500 companies face losses of $4.5 billion. Towers Watson estimates the total corporate hit will reach $14 billion this year, unless employers renegotiate union contracts and reduce retiree benefits.
I wonder if any of the retirees who are about to lose their post-retirement health care benefits have incomes under $250,000. Surely not.
Obama promised.
Seniors are getting taken to the cleaners under Obama Care. But it’s not just seniors. About 78 million baby boomers are about to become seniors.
This must be part of the Administration’s job creation startegy. NOT
And we are doing this right in the middle of a recession? What could be more stupid? John definitely picked the right song for his Health Alert today.
Maybe somebody can explain this. I thought the tax subsidy for employers was to induce them to provide a drug benefit that Medicare would otherwise be providing. The cost to the taxpayer was supposed to be reduced as a result.
So if the government now takes the subsidy away and employers drop coverage and shift costs back to Medicare, how does that free up money to pay for health reform?
I think the irony of all this will be that people start having to think of their own retirement/health care from now on instead of relying on their employers to handle all of the details.
You don’t see tax bills like this and have these companies continue to be so generous in their benefits.
Rep. Henry Waxman is going to drag AT&T, Caterpillar and other companies before the House Energy & Commerce Committee on April 21 so he can quiz (threaten) them about their assessment of Obamacare’s cost to their companies.
Waxman simply doesn’t believe what these companies are saying — because, as he says in his letters summoning the companies to appear at the 4/21 hearing, “the new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern.”
Waxman is also demanding that the offending companies provide his committee with internal company documents, including any analyses related to the projected impact of health care reform and any other documents (including e-mail messages) sent to or prepared or reviewed by senior company officials related to the projected impact of health care reform.
Brian:
I hope Caterpiller and AT&T give Waxman an earful!
What you’re seeing is a one time non cash charge because special tax treatment and subsidies for retirees that were instituted as part of Medicare Part D are being modified. I know the argument in favor of that special tax treatment is that it encouraged companies to maintain their retiree prescription drug benefits. This argument ignores the fact that most of the retiree prescription drug benefits are contractual obligations due to union collective bargaining agreements that they couldn’t change if they wanted to. A good argument can be made that this is simply cutting back on a corporate welfare tax progam.
Second, the special tax treatment and subsidies in Medicare Part D must have also triggered one time gains. It’s my understanding that those gains were more then offset the recently announced charges, but I’d like to see them stated
Past considerations are sunk costs. The reality today is that we are going to tax capital to pay for current consumption. That’s not smart. It’s especially not smart if you want to encourage more job creation.
looks like the 2012 Mayan calendar ending is spot on. This guy is either going to get us killed by a middle eastern terrorists, hit the button himself, or turn everyone against one another until there are riots that end in escalations of biblical proportions.
What is so hard for the distinquished members of the House Energy and Commerce Committee to understand? Since it is a one time charge it is self-explanatory.Their claims of 3% reduction are forecasted through 2016. Why are they interested in any emails, etc going back to 2003 and questioning the companies accounting methods? Seems to me Congress’ accounting methods are the ones we should be calling into question.
Dems said it would LOWER health care costs for employers. So what’s going on?
Well, if you’ve taken college level accounting and know a thing a two about these booking costs you would know what the news isn’t telling you.
The “costs” that these companies are “booking” are tax-free government subsidy payments that the companies receive to help these companies pay the cost of health care for their employees.
The health care reform has taken away these tax-free government subsidy payments to these companies.
It’s NOT that the companies are having to PAY OUT in cash the $1Billion or $150 Million or $31 Million, it’s that these companies are no longer getting government checks, they cannot “book” these checks as tax-free income anymore.
The checks issued to these companies from the government are really your tax dollars.
david, hard to see what difference that makes. Bottom line: in the middle of a recession, the administration is effectively taking money out of the capital market — where it could have been used to invest and create jobs.
[…] AT&T, Caterpillar, John Deere and Verizon have all made internal calculations, according the House Energy and Commerce Committee, to determine how much could be saved by a) dropping their employer-provided insurance, b) paying a fine of $2,000 per employee, and c) leaving their employees with the option of buying highly-subsidized insurance in the newly created health-insurance exchange. […]