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Jewish World Review April 5, 2010 / 21 Nissan 5770 Waxman's witch hunt By Jack Kelly
http://www.JewishWorldReview.com | Obamacare will cost them a ton of money and could force them to drop the prescription drug coverage they've been providing to their retirees, several corporations have announced. AT&T said it is going to take a $1 billion write down. Caterpillar announced a $100 million hit; Deere, $150 million. This made Rep. Henry Waxman, D-Calif., chairman of the House Energy and Commerce Committee, very angry. He announced plans to hold a hearing April 21 on "claims by Caterpillar, Verizon and Deere that provisions in the new health care reform law could adversely affect their company's ability to provide health insurance to their employees. These assertions appear to conflict with independent analyses, which show that the new law will expand coverage and bring down costs." Rep. Waxman demanded executives give his committee internal company documents related to health care finances. A Republican member of Mr. Waxman's committee told Byron York of the Washington Examiner that this was "an attempt to intimidate and silence opponents" of Obamacare. Mr. Waxman should have thought a bit more before he bullied. If he goes through with his witch hunt, it is he who could be embarrassed. This is because all the companies Mr. Waxman is attempting to browbeat are doing is to comply with the law. They are required to file a form 8-K with the Securities and Exchange Commission whenever the company becomes aware of a "material event or a corporate change" that affects earnings. "Black letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including higher tax burden," The Wall Street Journal noted. And the Sarbanes-Oxley law, for which Mr. Waxman voted, requires companies to make their restatement of earnings public.
It will not be difficult for the companies to supply Rep. Waxman with the documentation he seeks, since it is the same documentation they would have to provide to the Securities and Exchange Commission. What's at issue is the change Obamacare made in the 2003 law that provided a prescription drug benefit in Medicare. That law said employers who provide prescription drug benefits to retirees can receive subsidies covering 28 percent of eligible costs. Companies could deduct the entire amount spent on drug benefits from their taxable income, including the subsidies, which amount to about $665 per retiree. The subsidies were a win-win for retirees and for the government, because the drug benefits provided by most corporations are more generous than those provided by Medicare, but the tax break cost the government just $233, much less than $1,209 it costs Medicare to provide a smaller benefit. Obamacare removed the tax deductibility of these subsidies. That amounts to a $14 billion hit if all 3,500 companies currently receiving them continue to offer prescription drug benefits to their retirees despite the change, Towers Watson, a human resources consulting firm, told The Associated Press. But many won't. And that clobbers cost estimates for Obamacare from both ends. Eliminating the tax deduction for the subsidy would raise an additional $5 billion, the Congressional Budget Office estimated, because CBO assumed all companies would continue to provide the benefit even if they lost the deduction. But if many drop it, the additional revenues will be much less. And CBO made no allowance for the additional cost to Medicare if retirees are shifted onto it. With regard to prescription drugs, Obamacare changes what was a win-win into a lose-lose, a fact that will become evident if Rep. Waxman goes through with his hearing. A Democratic staffer with Mr. Waxman's committee told the American Spectator Mr. Waxman did not understand how Obamacare would impact business. "We had memos on these issues, but none of our people, we think, looked at them," the staffer said. "When they saw the stories last week about the charges some of the companies were taking, they were genuinely surprised, and assumed the companies were just doing this to embarrass them. … They just didn't understand what they were voting on."
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JWR contributor Jack Kelly, a former Marine and Green Beret, was a deputy assistant secretary of the Air Force in the Reagan administration.
© 2009, Jack Kelly |
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