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Obamacare, Day One by The Wall Street Journal - ClassicalLib17 - 03-26-2010
ObamaCare Day One
Companies are already warning about higher health-care costs.
Democrats dragged themselves over the health-care finish line in part by repeating that voters would like the plan once it passed. Let's see what they think when they learn their insurance costs will jump right away.
Even before President Obama signed the bill on Tuesday, Caterpillar said it would cost the company at least $100 million more in the first year alone. Medical device maker Medtronic warned that new taxes on its products could force it to lay off a thousand workers. Now Verizon joins the roll of businesses staring at adverse consequences.
In an email titled "President Obama Signs Health Care Legislation" sent to all employees Tuesday night, the telecom giant warned that "we expect that Verizon's costs will increase in the short term." While executive vice president for human resources Marc Reed wrote that "it is difficult at this point to gauge the precise impact of this legislation," and that ObamaCare does reflect some of the company's policy priorities, the message to workers was clear: Expect changes for the worse to your health benefits as the direct result of this bill, and maybe as soon as this year.
Mr. Reed specifically cited a change in the tax treatment of retiree health benefits. When Congress created the Medicare prescription drug benefit in 2003, it included a modest tax subsidy to encourage employers to keep drug plans for retirees, rather than dumping them on the government. The Employee Benefit Research Institute says this exclusionâequal to 28% of the cost of a drug planâwill run taxpayers $665 per person next year, while the same Medicare coverage would cost $1,209.
In a $5.4 billion revenue grab, Democrats decided that this $665 fillip should be subject to the ordinary corporate income tax of 35%. Most consulting firms and independent analysts say the higher costs will induce some companies to drop drug coverage, which could affect about five million retirees and 3,500 businesses. Verizon and other large corporations warned about this outcome.
U.S. accounting laws also require businesses to immediately restate their earnings in light of the higher tax burden on their long-term retiree health liabilities. This will have a big effect on their 2010 earnings.
While the drug tax subsidy is for retirees, companies consider their benefit costs as a total package. The new bill might cause some to drop retiree coverage altogether. Others may be bound by labor contracts to retirees, but then they will find other ways to cut costs. This means raising costs or reducing coverage for other employees. So much for Mr. Obama's claim that if you like your coverage, you can keep itâeven at Fortune 500 companies.
In its employee note, Verizon also warned about the 40% tax on high-end health plans, though that won't take effect until 2018. "Many of the plans that Verizon offers to employees and retirees are projected to have costs above the threshold in the legislation and will be subject to the 40 percent excise tax." These costs will start to show up soon, and, as we repeatedly argued, the tax is unlikely to drive down costs. The tax burden will simply be spread to all workersâthe result of the White House's too-clever decision to tax insurers, rather than individuals.
A Verizon spokesman said the company is merely addressing employee questions about ObamaCare, not making a political statement. But these and many other changes were enabled by the support of the Business Roundtable that counts Verizon as a member. Verizon CEO Ivan Seidenberg's health-reform ideas are 180 degrees from Mr. Obama's, but Verizon's shareholders and 900,000 employees and retirees will still pay the price.
Businesses around the country are making the same calculations as Verizon and no doubt sending out similar messages. It's only a small measure of the destruction that will be churned out by the rewrite of health, tax, labor and welfare laws that is ObamaCare, and only the vanguard of much worse to come.
Re: Obamacare, Day One - WT Reader - 03-26-2010
Hey ClassicalLib...
Did you write this article or just paste it on?
If you did not write it, who did, and what is the source?
Also, if you did not write it, what is your take on it?
It is easy to copy and paste material, quite another to write your own articulate, reasoned perspective supporting
a viewpoint and how it will significantly help millions of additional Americans achieve affordable and accessible health care.
-- WT Reader
Re: Obamacare, Day One by The Wall Street Journal - gmg77 - 03-26-2010
Day one wall street healthcare stocks went up! So there are winners and losers from HCR bill the net effect is whats important.
Re: Obamacare, Day One by The Wall Street Journal - ClassicalLib17 - 03-26-2010
WT Reader wrote:
Quote:It is easy to copy and paste material, quite another to write your own articulate, reasoned perspective supportingI am not an economist, nor will I pretend to be. I read conservative articles because I believe that they most closely reflect the wisdom of our FOUNDING FATHERS. And that roster does not include the likes of Cloward and Pivenhttp://cloward-piven.com/;Saul Alinskyhttp://en.wikipedia.org/wiki/Saul_Alinsky;Woodrow Wilsonhttp://en.wikipedia.org/wiki/Woodrow_Wilson;Theodore Roosevelthttp://en.wikipedia.org/wiki/Theodore_Roosevelt;Franklin Roosevelt[url]http://en.wikipedia.org/wiki/Second_Bill_of_Rights. Yes, these people were(are) all leaders of the Progressive movement. Our great nation has been brought to its knees as a result of these misguided individuals social policies or tactics.
a viewpoint and how it will significantly help millions of additional Americans achieve affordable and accessible health care.
Re: Obamacare, Day One by The Wall Street Journal - ClassicalLib17 - 03-26-2010
gmg77 wrote
ay one wall street healthcare stocks went up! So there are winners and losers from HCR bill the net effect is whats important.gmg77 My, what a coincidence! The Healthcare Myths and Truths piece I posted said this: This bill is almost identical to the plan written by AHIP, the insurance company trade association, in 2009.
The original Senate Finance Committee bill was authored by a former Wellpoint VP. Since Congress released the first of its health care bills on October 30, 2009, health care stocks have risen 28.35%.
Re: Obamacare, Day One by The Wall Street Journal - gmg77 - 03-26-2010
Id love to see Thomas Jefferson's reation to Fox news :lol:
Anyway a little google goes a long way.
These charges are from government subsidies being taxed. The tax free subsidies are from 2003 legislation and the new bill kicks in 2013. Hardly a crisis they have 3yrs to adapt to conditions from 7 years ago.
I agree this bill is written for and by the drug and insurance companies. I worry about the personal cost to individuals. What cost controls prevent these insurance companies from gouging us. Will the exchange and mandatory insurance create enough competition? Is this just set up to fail so that the public option is more attractive?
The funny thing is the individual mandate and gov subsidies for insurance companies is a right wing think tank idea adopted by Hillary and later Obama as the only way to get reform.
I know a "progressive" source.
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