PDA

View Full Version : Caterpillar: Health care bill would cost it $100M



Eric Johnson
03-19-2010, 11:48 AM
http://www.chicagobreakingbusiness.com/2010/03/caterpillar-health-care-bill-would-cost-it-100m.html

http://tinyurl.com/ybyotoh

Published on March 19, 2010 7:10 AM

Caterpillar Inc. said the health-care overhaul legislation being considered by the U.S. House of Representatives would increase the company's health-care costs by more than $100 million in the first year alone.

In a letter Thursday to House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner of Ohio, Caterpillar urged lawmakers to vote against the plan "because of the substantial cost burdens it would place on our shareholders, employees and retirees."

Caterpillar, the world's largest construction machinery manufacturer by sales, said it's particularly opposed to provisions in the bill that would expand Medicare taxes and mandate insurance coverage. The legislation would require nearly all companies to provide health insurance for their employees or face large fines.

-more-

YardleyLabs
03-19-2010, 11:56 AM
http://www.chicagobreakingbusiness.com/2010/03/caterpillar-health-care-bill-would-cost-it-100m.html

http://tinyurl.com/ybyotoh

Published on March 19, 2010 7:10 AM

Caterpillar Inc. said the health-care overhaul legislation being considered by the U.S. House of Representatives would increase the company's health-care costs by more than $100 million in the first year alone.

In a letter Thursday to House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner of Ohio, Caterpillar urged lawmakers to vote against the plan "because of the substantial cost burdens it would place on our shareholders, employees and retirees."

Caterpillar, the world's largest construction machinery manufacturer by sales, said it's particularly opposed to provisions in the bill that would expand Medicare taxes and mandate insurance coverage. The legislation would require nearly all companies to provide health insurance for their employees or face large fines.

-more-
The story might be more compelling if they showed why it would cost them more. I am not seeing anything in the bill that would increase employer costs by 20% in the first year, which is what Caterpillar estimated. In fact, there is a significant delay before most provisions take effect at all.

road kill
03-19-2010, 12:40 PM
The story might be more compelling if they showed why it would cost them more. I am not seeing anything in the bill that would increase employer costs by 20% in the first year, which is what Caterpillar estimated. In fact, there is a significant delay before most provisions take effect at all.
The fervent desire to implement "Nationalized Healthcare" might also be more compelling if they showed how it will cost less.

In case you forgot, private business has to make projections and forecasts the coming quarters and year.
They MUST turn a profit to remain solvent.

Your "rights givers" don't have that restriction.
Thay can either STEAL more from me or print more money!!!






GEEEZZZ!!!!




rk

Terry Britton
03-21-2010, 11:45 AM
The story might be more compelling if they showed why it would cost them more. I am not seeing anything in the bill that would increase employer costs by 20% in the first year, which is what Caterpillar estimated. In fact, there is a significant delay before most provisions take effect at all.

Something like a 4 year delay before provisions start, but taxes start immediately. 10 years of taxes to cover 6 years of coverage.

YardleyLabs
03-21-2010, 01:16 PM
Something like a 4 year delay before provisions start, but taxes start immediately. 10 years of taxes to cover 6 years of coverage.
Do you have any documentation of what taxes take effect when and which of those would be paid by Caterpillar or other employers?

M&K's Retrievers
03-21-2010, 01:22 PM
Do you have any documentation of what taxes take effect when and which of those would be paid by Caterpillar or other employers?

That's one of the problems. No one does.:(:confused::(

YardleyLabs
03-21-2010, 01:26 PM
That's one of the problems. No one does.:(:confused::(
The bills are on line (and have been for three days) along with the CBO assessment. I'm not seeing anything to support your contentions.

M&K's Retrievers
03-21-2010, 02:18 PM
The bills are on line (and have been for three days) along with the CBO assessment. I'm not seeing anything to support your contentions.

Why bother if the people paid to read it don't think it's necessary. I suspect it will take months if not years to sort this cluster f*** out. Just remember-the big print giveth and the small print taketh away.

YardleyLabs
03-21-2010, 02:57 PM
Why bother if the people paid to read it don't think it's necessary. I suspect it will take months if not years to sort this cluster f*** out. Just remember-the big print giveth and the small print taketh away.
Unfortunately, Terry's silence and your response are typical of the entire debate. In fact, I don't see business taxes that take effect in the first year of the bill. The business mandates relate to eliminating pre-existing condition exclusions that virtually every single corporate sponsored plan already have implemented. I cannot see one single component of the bill that would impose any significant costs on Caterpillar in the first year, making their entire statement nothing but a lie. The constancy with which many of these lies are repeated -- all under the banner of doing whatever is needed to stop the bill -- is a major reason why opinion polls at this point mean nothing. If the proposals are adopted, there will be massive claims and counterclaims over the next nine months before the election. However, very few people will see any impact at all. The impacts that will be seen include an option for people without insurance as a result of pre-existing conditions to purchase private coverage, an elimination of pre-existing condition exclusions for newborns, and the beginning of tax credits for small businesses that offer insurance for their employees. I doubt that these new changes will destroy democracy forever.

M&K's Retrievers
03-21-2010, 03:35 PM
[QUOTE=YardleyLabs;587124]..... include an option for people without insurance as a result of pre-existing conditions to purchase private coverage, an elimination of pre-existing condition exclusions for newborns, ......QUOTE]

That assumes that there will be someone willing to underwrite the coverage and at what cost. I guess the Feds will take care of this little problem with the single payor system which is what they really wanted all along.

Terry Britton
03-21-2010, 04:29 PM
Unfortunately, Terry's silence and your response are typical of the entire debate. In fact, I don't see business taxes that take effect in the first year of the bill. The business mandates relate to eliminating pre-existing condition exclusions that virtually every single corporate sponsored plan already have implemented. I cannot see one single component of the bill that would impose any significant costs on Caterpillar in the first year, making their entire statement nothing but a lie. The constancy with which many of these lies are repeated -- all under the banner of doing whatever is needed to stop the bill -- is a major reason why opinion polls at this point mean nothing. If the proposals are adopted, there will be massive claims and counterclaims over the next nine months before the election. However, very few people will see any impact at all. The impacts that will be seen include an option for people without insurance as a result of pre-existing conditions to purchase private coverage, an elimination of pre-existing condition exclusions for newborns, and the beginning of tax credits for small businesses that offer insurance for their employees. I doubt that these new changes will destroy democracy forever.

Because I am off taking care of real life business does not make the debate false. My source was from a phone conversation with John Sullivan the other night when he called the house. I don't know the details between business and individual taxes, but either way it will be the public footing the bill.

http://sullivan.house.gov/

I would bet most states have some sorta public option such as SoonerCare here in Oklahoma. This may be a push to have us working states fund those public options for the "help me states" who are in trouble such as California, Illinois, and several in the NE. For instance in California, pushing a huge tax burden from the state to the federal government would help out the state budgets.

Eric Johnson
03-21-2010, 05:15 PM
Jeff-

I'm going to bring up that pesky question that you've never answered. How are you going to provide 30+ million more persons health coverage yet produce a net savings in cost?

It has been widely reported that the benefits start in the 6th year from now and the costs (taxes) start within the year. Every network reports this. The principal newspapers are reporting it. Rep. Bart Stupak just reported this himself and tried to defend it.

I don't have time to wade through 2700 pages. Please tell us how you could refute this 10 year vs. 6 year disparity.

Folks talk about the Nov elections. My hope is that incumbents get handed their heads in primaries this June. Why wait until Nov?

Eric

M&K's Retrievers
03-21-2010, 06:03 PM
Jeff-

I'm going to bring up that pesky question that you've never answered. How are you going to provide 30+ million more persons health coverage yet produce a net savings in cost?

It has been widely reported that the benefits start in the 6th year from now and the costs (taxes) start within the year. Every network reports this. The principal newspapers are reporting it. Rep. Bart Stupak just reported this himself and tried to defend it.

I don't have time to wade through 2700 pages. Please tell us how you could refute this 10 year vs. 6 year disparity.

Folks talk about the Nov elections. My hope is that incumbents get handed their heads in primaries this June. Why wait until Nov?

Eric

Many of the 30 millon are uninsured because they don't want to spend the money to buy it. They will continue to opt out of the system by paying the fine instead of buying coverage because it will be less expensive for them to do so.When they are diagnosed with something, that's when they will buy coverage without preexisting condition limitations. This "program" will not reduce the number of insureds in this country and the system will continue to provide benefits for the uninsured at the ER. I think we're going to find that many people who have coverage now will drop it and pay the fine. Hell, why wouldn't they?

The insurance pools will become homes for the sick while the healthy bow out until coverage is needed.

Whistler
03-21-2010, 09:20 PM
Sounds good, I think I'll drop my insurance and pay the fine instead.

YardleyLabs
03-21-2010, 09:37 PM
Jeff-

I'm going to bring up that pesky question that you've never answered. How are you going to provide 30+ million more persons health coverage yet produce a net savings in cost?

It has been widely reported that the benefits start in the 6th year from now and the costs (taxes) start within the year. Every network reports this. The principal newspapers are reporting it. Rep. Bart Stupak just reported this himself and tried to defend it.

I don't have time to wade through 2700 pages. Please tell us how you could refute this 10 year vs. 6 year disparity.

Folks talk about the Nov elections. My hope is that incumbents get handed their heads in primaries this June. Why wait until Nov?

Eric
Well, the bill is estimated to increase Federal government costs by $940 billion over 10 years. The two primary components of that are subsidies to assist the uninsured to buy coverage and subsidies to help people who are currently insured to pay the costs of the ri coverage. These costs are financed, as all spending bills should be, through a series of spending cuts and revenue (taxes and fees) increases built into the bill to result in a net reduction in the deficit. Several programs are included to reduce costs. However,in accordance with standard practice, the CBO has not assumed that these programs will be effective. If they are, total costs would go down. In the second decade, the revenues created in the bill and the program cuts included are expected grow faster than the costs of the program itself. That is the basis for the CBO's estimate that deficit reduction in the second decade of the program will exceed $1 trillion. The CBO report has been available online for three days if you want to check it yourself.


Many of the 30 millon are uninsured because they don't want to spend the money to buy it. They will continue to opt out of the system by paying the fine instead of buying coverage because it will be less expensive for them to do so.When they are diagnosed with something, that's when they will buy coverage without preexisting condition limitations. This "program" will not reduce the number of insureds in this country and the system will continue to provide benefits for the uninsured at the ER. I think we're going to find that many people who have coverage now will drop it and pay the fine. Hell, why wouldn't they?

The insurance pools will become homes for the sick while the healthy bow out until civerage is needed.
The uninsured are generally the working poor. They do not include the poor since the poor are now covered by Medicaid, and they do not include the elderly or permanently disabled since they now receive Medicare. An uninsured family might include, for example, a family of 3-4 earning $30,000/year through employers that do not provide an employee health care program. Buying health insurance privately would cost an average of $12-15000 at least -- a prohibitive cost if the family also has to pay rent and for some ridiculous reason wants to eat.

Eric Johnson
03-21-2010, 10:32 PM
The CBO report only reflects the bill as presented. Missing from the bill is the physcian fix which should be there. Included in it is some form of a takeover of the student loan program, except in North Dakota....imagine the deal with ex-Sen Daschle....for the income to offfset the expenses. They're borrowing from SS, making the payment with IOUs, and then showing the asset as a gain to the bill and not showing the debt.

The auditor at HHS says that he can't prove the CBO's numbers. With three days, you'd think he could.

Now we come to the real kicker. The Reconciliation bill won't pass the Senate. No Reconciliation bill can impact SS and that means that they need 60 votes to pass it....oops. What it means is that the House members who voted for it under the assumption that it would be "fixed" got sucker punched by Pelosi et al.

Then there is the Executive Order. It's worthless because no executive order can trump Public Law and the Senate bill will soon be Public Law. It may be theoretically honored by the President but in the trenches, this bill will be used to pay for abortions.

It's a shame that a once great party has wrapped itself in such shame.

Eric

M&K's Retrievers
03-21-2010, 11:23 PM
.
The uninsured are generally the working poor. They do not include the poor since the poor are now covered by Medicaid, and they do not include the elderly or permanently disabled since they now receive Medicare. An uninsured family might include, for example, a family of 3-4 earning $30,000/year through employers that do not provide an employee health care program. Buying health insurance privately would cost an average of $12-15000 at least -- a prohibitive cost if the family also has to pay rent and for some ridiculous reason wants to eat.

Jeff, that's just not true. According to most estimates, 50% of the uninsured just don't buy insurance. They are young and bullet proof.

We should take care of the poor and the uninsurable but not at the expense of 85% of the insured population. But I guess it doesn't matter now. Big brother has taken over - for now. Can't wait for November.

labraiser
03-21-2010, 11:26 PM
i'll bet you two things that will happen

1. Cost will not go down for insurance to the american who pays for their policy's
2. The savings will not happen, when ever has the goverment ever done anything that cost less.

Bend over because here it comes. I just can't wait until NOV 2010 and NOV 2012 for the paybacks!

Scott

Terry Britton
03-22-2010, 01:12 AM
Jeff, that's just not true. According to most estimates, 50% of the uninsured just don't buy insurance. They are young and bullet proof.

We should take care of the poor and the uninsurable but not at the expense of 85% of the insured population. But I guess it doesn't matter now. Big brother has taken over - for now. Can't wait for November.

I remember out of college, I didn't have insurance for a few years because I chose to buy groceries, and take care of other bills. I also know there are business owners that don't have insurance, but save for medical care themselves including going to international locations for surgeries at less than the out of pocket costs of staying in the US on insurance.

Eric Johnson
03-22-2010, 11:12 AM
Well... except for the "fix" bill, it's done. In five years, one side or the other will be saying, "See. I told you so." The problem will be if it's the one side, the repair can't be removed whereas if it's the other, we can just press on saving money hand over fist and curing cancer and such.

One Representative had some interesting observations. He commented (paraphrasing)

1. A year ago this all started as a way to repair inequities in the system but suddenly we're dealing with the system as though it has completely collapsed...and it hasn't.

2. We're talking about all the uninsured....32 million. However, this bill only provides coverage for those who are employed.

3. There is a huge difference between coverage and care. There is nothing that mandates any improvements in care. Whether folks were covered by insurance or were walk-ins to the emergency room, they got care. This isn't going to do a thing to improve that.

BYW, this was a Democratic Congressman.

As to the "fix" bill, there are folks who are laying odds that it won't pass the Senate (that pesky 60th vote) so the Senate version is going to be the law of the land.

Eric

HuntsmanTollers
03-22-2010, 11:20 AM
One item that could also be costing Caterpillar money is the Biofuel provision. Don't know why Biofuel was included in a health care bill. Smells of earmark. Wonder how that is going to help the green movement.

HuntsmanTollers
03-22-2010, 11:23 AM
Not to mention the corporate estimated tax rate was increased by 14.5%.

SEC. 1410. TIME FOR PAYMENT OF CORPORATE ESTIMATED
4 TAXES.
5 The percentage under paragraph (1) of section
6 202(b) of the Corporate Estimated Tax Shift Act of 2009
7 in effect on the date of the enactment of this Act is in8
creased by 14.5 percentage points

YardleyLabs
03-22-2010, 11:24 AM
...

As to the "fix" bill, there are folks who are laying odds that it won't pass the Senate (that pesky 60th vote) so the Senate version is going to be the law of the land.

Eric
The fixes bill was written specifically to conform with rules for reconciliation bills so only 50+1 votes are needed to pass. In fact, that was one of the reasons that the Stupak language could not be included in the bill as an amendment -- it would then have violated parliamentary limits for what can be done through reconciliation. As a consequence, the anti-abortion language would have needed to be be considered as a separate bill standing on its own. As such it would be unlikely to pass either house.

HuntsmanTollers
03-22-2010, 11:31 AM
What about the rule preventing reconciliation from being used on bills that impact Social Security?

Eric Johnson
03-22-2010, 12:26 PM
Jeff-

Matt's right. Reconciliation can't be used on bills that impact Social Security. So, SS can be removed from the "fix" bill but, how much will it then fix? Further, when (if) SS is removed, that makes the bill different from the one that passed the House so it will have to go back to the House for re-approval.

The House members will be P.O.ed because they were promised as part of approval of the main bill that it would fixed...and it can't be because the Dems can't produce the votes to do it. All the kick-backs and special deals will be the law of the land and written on the horse collar the Dems have to wear come election time.

Shakespeare had a phrase....."Hoist....

Eric

YardleyLabs
03-22-2010, 03:25 PM
Jeff-

Matt's right. Reconciliation can't be used on bills that impact Social Security. So, SS can be removed from the "fix" bill but, how much will it then fix? Further, when (if) SS is removed, that makes the bill different from the one that passed the House so it will have to go back to the House for re-approval.

The House members will be P.O.ed because they were promised as part of approval of the main bill that it would fixed...and it can't be because the Dems can't produce the votes to do it. All the kick-backs and special deals will be the law of the land and written on the horse collar the Dems have to wear come election time.

Shakespeare had a phrase....."Hoist....

Eric
The bill has no effect on the Social Security Trust Funds (as noted explicitly in the bill)
There is a change specific to the patient responsibility act that links financial tests to adjusted gross income rather than gross income.
The entire Medicare Prescription program was adopted using reconciliation, as were the entire welfare reform bill and the 2003 tax cuts. All were gross violations of the reconciliation process. The House worked hard to be pristine about how they used the process here and, as I understand it, ran the bill through the Parliamentarian first.
The Senate bill has already been adopted so the effect of not passing or delaying the "fixes" bill does not affect the fact that we will have health reform. It simply leaves things like the Nebraska deal intact. The Senate bill becomes law as soon as it is signed by the President, whether or not the fixes bill is ever adopted.

Buzz
03-22-2010, 03:37 PM
The bill has no effect on the Social Security Trust Funds (as noted explicitly in the bill)
it is signed by the President, whether or not the fixes bill is ever adopted.

From what I heard on the news yesterday, Republicans were trying to say that this bill impacted social security. Apparently the CBO said that because of the tax in "Cadillac Plans" the plans would be cut and workers would receive higher wages in return. These higher wages would cause more money to be collected through payroll taxes, and therefore Social Security was impacted and thus reconciliation could not be used on the HCR fixes.

:rolleyes::rolleyes::rolleyes:

YardleyLabs
03-22-2010, 03:37 PM
The CBO report only reflects the bill as presented. Missing from the bill is the physcian fix which should be there. ...
The Physician "fix" was not part of the bill. Why would the CBO include it? If Congress chooses to implememt the physician fix, they will hopefully do it under PayGo rules and it may be subject to filibuster in the Senate. In that case, the Republicans may choose to filibuster the change as they did when it was first brought up or not. The bill will require a CBO review if the fee cuts are being deferred permanently or for ten years. In the past, Congress under Republican leadership chose to do the deferrals annually so that they did not need to provide a source of funding and could pay the cost by simply borrowing more money instead.

Eric Johnson
03-22-2010, 04:03 PM
I realize the physcian fix was not a part of the bill. It should have been for the CBO to perform an honest appraisal on the effects of the bill. It was removed to make the bill pass muster. They also played some games with Medicare.

Wait.....the CBO hasn't finished. Their appraisal was only a draft.

As far as the issue of reconciliation of the "fix' bill, we'll have to wait and see. With the filibuster-proof Senate gone and action moving to there, who knows what the ball of wax will look like when done.

Eric

YardleyLabs
03-22-2010, 04:12 PM
I realize the physcian fix was not a part of the bill. It should have been for the CBO to perform an honest appraisal on the effects of the bill. It was removed to make the bill pass muster. They also played some games with Medicare.

Wait.....the CBO hasn't finished. Their appraisal was only a draft.

As far as the issue of reconciliation of the "fix' bill, we'll have to wait and see. With the filibuster-proof Senate gone and action moving to there, who knows what the ball of wax will look like when done.

Eric
The difference is that previously the question before the Senate was health reform yes or no. That question has now been answered with the adoption of the Senate bill as passed on 12/24. The only question on the table now is whether or not that law (not longer a bill once signed by Obama tomorrow) will be amended or not. I doubt that it will be repealed since that would be subject to bot a filibuster and a veto.;-)

Eric Johnson
03-22-2010, 05:41 PM
Well....given the intense dislike for what has transpired in the last 24 hours by apparently a majority of the populace, many things could happen in the foreseeable future. One thing that has not been mentioned is an overide of Presidential veto of a repeal. There are a couple of pre-requisites but, that's an option.

This is particlularly true if many of the House Dems feel that they were lied to about this "fix." There could be enough of those that, with the Repubs, they'd toss Speaker Pelosi as a first step and then go from there.

We shall see over the next few days I expect.

Eric

YardleyLabs
03-25-2010, 06:16 PM
Explanation emerges....

As it turns out, the losses being projected by Caterpillar and now John Deere are not attributable to any of the requirements related to health coverage. Instead, there is apparently a provision in the bill that reduces the effective subsidies that the Federal government now gives them for providing drug benefits to retirees. According to a report on CNN, one of the provisions of the 2003 Medicare drug program was a subsidy to private retirement programs of $633 per employee per year for providing drug benefits. This subsidy was reportedly made taxable, reducing its effective value to the companies by one-third. So if Caterpillar is losing $100 million (one-third), does that mean that we are still paying them a subsidy of $200 million per year? Why are we paying them anything?

Buzz
03-29-2010, 02:40 PM
Explanation emerges....

As it turns out, the losses being projected by Caterpillar and now John Deere are not attributable to any of the requirements related to health coverage. Instead, there is apparently a provision in the bill that reduces the effective subsidies that the Federal government now gives them for providing drug benefits to retirees. According to a report on CNN, one of the provisions of the 2003 Medicare drug program was a subsidy to private retirement programs of $633 per employee per year for providing drug benefits. This subsidy was reportedly made taxable, reducing its effective value to the companies by one-third. So if Caterpillar is losing $100 million (one-third), does that mean that we are still paying them a subsidy of $200 million per year? Why are we paying them anything?

Jeff, I just read an article on this topic, and it goes a little different than what you have explained there. As part of the prescription drug bill passed in 2003, companies were able to write off what they spent on retiree prescription drug coverage. The average cost of coverage per retiree was $663. In addition to getting the tax write-off, they got a 28% subsidy from the federal government. So, a company that paid $663 got to write off the whole cost. But, the company only paid $663 - 28% subsidy.

So they paid: 663 - 185.64 = $477.36

Now they can only write off what they actually paid, which is on average $477.36.

Now, these write downs, contrary to what a lot of people think, are not yearly costs to the company for having the rules changed on what they can write off. Companies such as Caterpillar have to record on their financial statements liabilities associated with the FUTURE estimated costs associated with providing insurance to retired employees, as well as recording as assets future tax related items such as these subsidies. Now that this subsidy will be treated differently(for tax purposes)the company needs to reduce the tax assets on its books to record the impact on FUTURE expenditures related to retiree health benefits. This is a ONE TIME CHARGE.

YardleyLabs
03-29-2010, 02:58 PM
That makes more sense than the explanations I received. Not only would it be a one time charge, it is really just a paper charge since it would not affect real assets nor would it affect stock valuation.

Buzz
03-29-2010, 03:07 PM
That makes more sense than the explanations I received. Not only would it be a one time charge, it is really just a paper charge since it would not affect real assets nor would it affect stock valuation.

I had to go dig into this because over my lunch hour I was in my truck listening to Fox on my Sirius Radio. (I had to go dig our bicycles out of the warehouse for summer!:cool:) John Gibson was on and they were raking Democrats over the coals for these huge burdens that they are dumping on Corporate America because of this HCR bill. I thought, Oh My God, they are going to dump a BILLION DOLLARS on ATT????? I KNEW there had to be more to the story, because every time I hear something like this getting beaten to a pulp on conservative radio, there ALWAYS seems to be way more to the story than they are willing to divulge. ;-)

And we wonder why the tea party folks are so misinformed about taxes. This article from Bruce Bartlett is case in point:

http://www.forbes.com/2010/03/18/tea-party-ignorant-taxes-opinions-columnists-bruce-bartlett.html

He's done a series of very interesting articles for Forbes:

http://search.forbes.com/search/colArchiveSearch?author=bruce+and+bartlett&aname=Bruce+Bartlett

Buzz
03-29-2010, 09:27 PM
Here is a nice summary of the situation from Marketwatch.


http://blogs.marketwatch.com/cody/2010/03/29/what-do-these-health-care-reform-charges-at-att-and-others-mean-for-your-portfolio/



On March 23, 2010, the President signed into law comprehensive health care reform legislation under the Patient Protection and Affordable Care Act (HR 3590). Included among the major provisions of the law is a change in the tax treatment of the Medicare Part D subsidy. AT&T Inc. (”AT&T”) intends to take a non-cash charge of approximately $1 billion in the first quarter of 2010 to reflect the impact of this change. As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health care benefits offered by the company.

Yup, that’s it. The whole shebang in its entirety. At least for now — there’ll be more details in coming quarterly profit reports and other SEC filings.

Now stick with me for one minute before we talk markets-impact, okay? I want to be clear about the ambiguous “a change in the tax treatment of the Medicare Part D subsidy” line there. Here’s what facts are:

As explained in plain English in today’s Wall Street journal, “companies that provide this [Medicare Part D] benefit, as AT&T does, receive a federal subsidy, plus they can deduct the value of this subsidy from their taxes. The health overhaul cancels the deductibility of the subsidy.”

Let me ask a question of readers here in even plainer English: Can anybody actually be upset about the fact that giant corporations have to stop taking tax deductions for welfare checks they get for providing health care to their employees and retirees?

Imagine if you will, the government sending you a check to pay for your prescription drugs and then you getting to deduct that amount from your income tax statement. HEY, BIG GOVERNMENT, KEEP YOUR DAMN HANDS OFF MY SUBSIDIES AND ENTITLEMENTS!

luvmylabs23139
03-29-2010, 10:01 PM
I don't have a problem with the elimination of the tax advantage.
I have a HUGE problem with Henry Waxman and crew throwing a temper tantrum and demanding hearings when these companies are following the letter of the law by announcing the one time write off.
They should not be made out to be villians for following SEC rules.

Henry V
03-29-2010, 10:28 PM
Great article Buzz. Both Greta V and fox business had WSJ folks on this evening talking all about how the new bill was going to cost these companies billions. Maybe these WSJ folks should read one of their owns analysis of the situation. More from the link:

So the upshot is this – the total long-term charge (nay, hit to earnings) from this particular provision of the reform bill that these companies are issuing ambiguous and scary press releases about is at most simply a loss of welfare income equivalent to about 5% of this year’s earnings.

And here’s the really good news, aside from the fact that these companies are going to be on a little bit less welfare this year – now we have confidence. We just quantified the costs of this part of the reform, and we’ll be quantifying all these reforms in coming weeks and months. And quantification builds certainty and certainty builds confidence and confidence builds booming economies and bull markets.

You know, it is almost as if some of these reporters and networks are trying to insight fear in their viewers. Hard to believe ;)

Buzz
03-29-2010, 10:42 PM
Great article Buzz. Both Greta V and fox business had WSJ folks on this evening talking all about how the new bill was going to cost these companies billions. Maybe these WSJ folks should read one of their owns analysis of the situation. More from the link:


You know, it is almost as if some of these reporters and networks are trying to insight fear in their viewers. Hard to believe ;)

You forgot anger. They are trying to incite fear and anger. Nice healthy combination of emotions!

You know something funny? I should not have left out this little tidbit about the author of the article.


Cody Willard, Editor

Cody Williard is an anchor on the Fox Business Network. His access to both political and business leaders gives him a unique perspective on the markets and how to generate wealth.

I'm usually listening to Gretta on the radio in the morning. I can't wait to hear how she is characterizing this tomorrow. Not good for my blood pressure, but listening to Fox gives me lots of interesting things to research. ;-)

Hew
03-30-2010, 06:05 AM
And even more explanation emerges....

The subsidy those companies were receiving from the govt. was not "corporate welfare" per se. It was money that the govt. started contributing in 2003 so that those companies could keep their retirees on their policy and prevent them from being dumped in the lap of the federal prescription drug plan. With the subsidy killed the companies will now release 2 million employees to Medicare and save $1,000 per employee. It was estimated that the govt. was paying less per subsidy than they'll pay now that the retirees are the government's responsibility.

http://www.nypost.com/p/news/opinion/opedcolumnists/shut_up_he_argues_uirufysrkDvUbxPbciPl5O

Buzz
03-30-2010, 09:24 AM
It does not surprise me one bit that you think that it is a good idea to give a company money, then turn around and let them deduct the amount that you gave them. Deductions aren't just for expenses anymore...

And look who the members are of the Employee Benefit Research Institute, quoted in the post article.

http://www.nypost.com/p/news/opinion/opedcolumnists/shut_up_he_argues_uirufysrkDvUbxPbciPl5O

Here is a sampling:

America's Health Insurance Plans
Blue Cross Blue Shield Association
CIGNA
Hewitt Associates LLC

What a surprise....

Hew
03-30-2010, 10:44 AM
And look who the members are of the Employee Benefit Research Institute, quoted in the post article.

http://www.nypost.com/p/news/opinion/opedcolumnists/shut_up_he_argues_uirufysrkDvUbxPbciPl5O

Here is a sampling:

America's Health Insurance Plans
Blue Cross Blue Shield Association
CIGNA
Hewitt Associates LLC

What a surprise....
Yeah, we really shouldn't listen to what people with experience and actual skin in the game have to think. We should only rely on what Obama, Pelosi, Reid and Moulitsas have to say...you know, with their vast wealth of experience running employee benefit companies and all.

M&K's Retrievers
03-30-2010, 10:53 AM
Yeah, we really shouldn't listen to what people with experience and actual skin in the game have to think. We should only rely on what Obama, Pelosi, Reid and Moulitsas have to say...you know, with their vast wealth of experience running employee benefit companies and all.

That would make waaaaay too much sense, Hew. What we're you thinking?

YardleyLabs
03-30-2010, 12:20 PM
Virtually every single dollar spent by the Federal government ends up in the hands of a private business. As a consequence, anything done to save money will result in business losses. Making this Federal subsidy taxable doesn't strike me as a bad place to make a cut. It has an advantage over other types of possible cuts since it provides no incentive for cutting back on current operations or moving more jobs overseas. Neither act would reduce the impact of the cuts. Where would you rather obtain the savings?

Eric Johnson
03-30-2010, 03:40 PM
I got it. I got it.

By not passing the bill in the first place!

YardleyLabs
03-30-2010, 03:51 PM
I got it. I got it.

By not passing the bill in the first place!
Quite frankly, every tax increase and cut in the bill would hardly make a dent in our deficit even if we didn't implement health care reform. We should be cutting our non-Medicare and non-Social Security related deficit by $600+ billion per year through some mix of spending cuts and revenue increases beyond what we will achieve through economic growth. That is more than the entire discretionary Federal budget excluding defense spending. What are your ideas for addressing this? Taxes are currently at their lowest level in the last 60+ years and we are bankrupt. The level of cuts I am talking about represents about 5% of total GDP.

EDIT: BTW, extending the tax cuts would, as I understand it, increase the deficit by an additional $70 billion per year. Do you believe they should be extended anyway or do you have suggestions for cuts that will offset the entire amount?

menmon
03-31-2010, 11:06 AM
http://www.chicagobreakingbusiness.com/2010/03/caterpillar-health-care-bill-would-cost-it-100m.html

http://tinyurl.com/ybyotoh

Published on March 19, 2010 7:10 AM

Caterpillar Inc. said the health-care overhaul legislation being considered by the U.S. House of Representatives would increase the company's health-care costs by more than $100 million in the first year alone.

In a letter Thursday to House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner of Ohio, Caterpillar urged lawmakers to vote against the plan "because of the substantial cost burdens it would place on our shareholders, employees and retirees."

Caterpillar, the world's largest construction machinery manufacturer by sales, said it's particularly opposed to provisions in the bill that would expand Medicare taxes and mandate insurance coverage. The legislation would require nearly all companies to provide health insurance for their employees or face large fines.

-more-

The reason it is costing them this money is that they are losing a large part of their corporate wellfare from the government of the prescription drug. Something about that sounds fiscally responsible;)

Eric Johnson
03-31-2010, 11:55 AM
While I'll admit that my answer was fairly glib, you raised some interenting points.

I guess I'd start by looking at the taxes not paid by the folks on welfare. Here I'm not talking about the folks who really need help but rather the folks with welfare payments that represent fraud and abuse. The liberals would gain a great deal of credibility if they'd join us in seeking an end to fraudulent claims ... not as a source of revenue for other new programs but as an action against this criminal behavior. As I recall, the President said there were billions to be gleaned from this source.

Eric

Franco
03-31-2010, 03:55 PM
When employers get their backs pushed against the wall, they will simply lower wages to pay for the additional cost of health insurance. I met earlier this week with a group that owns Nursing Homes across the state. Many of thier employess are not provided with Health Insurance. Their statement was simple; If the Feds make the cost of business higher, they will either charge more or pay employees less or a combination of both!

menmon
03-31-2010, 04:14 PM
When employers get their backs pushed against the wall, they will simply lower wages to pay for the additional cost of health insurance. I met earlier this week with a group that owns Nursing Homes across the state. Many of thier employess are not provided with Health Insurance. Their statement was simple; If the Feds make the cost of business higher, they will either charge more or pay employees less or a combination of both!

Let me give you an example why their is a flaw in your logic. My employer provides me the opportunity to purchase health insurance with a provider, but I pay for it and it is quality insurance and I'm guessing just short of a $1000 is taken from my check per month. Now if a competing bank offered me the same salary and paid for it, I might consider working for them, because that would be a $12,000 per year raise. Now, an employer can always terminate benefits and lower salaries, but their risk is that a particular employee will not work for them anymore, and cheap doesn't mean better.

The reason unions become strong within a company is that an employer does not treat their employees right, and I can assure you, every company you find unions, you can root them back to bad employee-employer relations. And the ones that don't have unions were right by their employees.

Productivity is so important, and if providing drug coverage and good health benefits encourages better productivity, this is a small price to pay.

You can't consider this is a vaccum. That is waht is wrong with financial models to begin with; they are only as good as their assumptions.

badbullgator
03-31-2010, 04:18 PM
[quote=sambo;592762]Let me give you an example why their is a flaw in your logic. My employer provides me the opportunity to purchase health insurance with a provider, but I pay for it and it is quality insurance and I'm guessing just short of a $1000 is taken from my check per month. Now if a competing bank offered me the same salary and paid for it, I might consider working for them, because that would be a $12,000 per year raise. Now, an employer can always terminate benefits and lower salaries, but their risk is that a particular employee will not work for them anymore, and cheap doesn't mean better. [quote]


Yes but when the bank across the street and every other bank is offering the same thing. Most "banks" will cut benifits or pay or people if the cost to them goes up.

badbullgator
03-31-2010, 04:21 PM
The reason it is costing them this money is that they are losing a large part of their corporate wellfare from the government of the prescription drug. Something about that sounds fiscally responsible;)


That corporate welfare is going to the same thing no matter if they give it to the company or the company dumps their prescription coverage off on medicare. Far cheaper for you and I to give them some and not pay the whole deal. They could simply dump them on the taxpayers fully;-)

menmon
03-31-2010, 04:30 PM
That corporate welfare is going to the same thing no matter if they give it to the company or the company dumps their prescription coverage off on medicare. Far cheaper for you and I to give them some and not pay the whole deal. They could simply dump them on the taxpayers fully;-)

I thought you didn't want the government in your business. You should consider how much higher taxes are going to cost you versus paying the same as everybody for insurance before you truly take a position on this.

menmon
03-31-2010, 04:34 PM
[quote=sambo;592762]Let me give you an example why their is a flaw in your logic. My employer provides me the opportunity to purchase health insurance with a provider, but I pay for it and it is quality insurance and I'm guessing just short of a $1000 is taken from my check per month. Now if a competing bank offered me the same salary and paid for it, I might consider working for them, because that would be a $12,000 per year raise. Now, an employer can always terminate benefits and lower salaries, but their risk is that a particular employee will not work for them anymore, and cheap doesn't mean better. [quote]


Yes but when the bank across the street and every other bank is offering the same thing. Most "banks" will cut benifits or pay or people if the cost to them goes up.

Maybe so, but the ones that want the best talent will pay what it takes. In the 90s, Merrill Lynch had a concierge sevices for us to keep us. Trust me, they don't make decisions like that on a few dollars per employee.

Franco
03-31-2010, 04:58 PM
Let me give you an example why their is a flaw in your logic. My employer provides me the opportunity to purchase health insurance with a provider, but I pay for it and it is quality insurance and I'm guessing just short of a $1000 is taken from my check per month. Now if a competing bank offered me the same salary and paid for it, I might consider working for them, because that would be a $12,000 per year raise. Now, an employer can always terminate benefits and lower salaries, but their risk is that a particular employee will not work for them anymore, and cheap doesn't mean better.

The reason unions become strong within a company is that an employer does not treat their employees right, and I can assure you, every company you find unions, you can root them back to bad employee-employer relations. And the ones that don't have unions were right by their employees.

Productivity is so important, and if providing drug coverage and good health benefits encourages better productivity, this is a small price to pay.

You can't consider this is a vaccum. That is waht is wrong with financial models to begin with; they are only as good as their assumptions.

You are dreaming!;-)

First, I sighted an example of Nursing Homes. Down here, they do not provide Health Insurance to thier empolyees. Any thought they may have had of providing them with HI is now mute. If they have to pay for it, they will lower wages in order to cover the additional cost.

I personally have HI through work that my employer pays most of it. My out-of-pocket in $180, month and I am 58 years old. I can assure you that when the significant rise in cost is passed on to the broadcast companies, they will lower pay to cover the cost.

Same for any other business with rising cost of doing business. They either have to charge more or pay less because the increased cost will have to be paid by someone. Businesses will not automatically give everyone a raise (added HI cost and increases in HI cost under the new plan), they will cut pay to cover the added employee benefits no matter what Obama says!

Buzz
03-31-2010, 05:27 PM
I thought you didn't want the government in your business. You should consider how much higher taxes are going to cost you versus paying the same as everybody for insurance before you truly take a position on this.

Hey Sambo!

Shouldn't you be brushing up on the rule book or something to get ready for the trial you're going to judge this weekend???? ;-)

badbullgator
03-31-2010, 07:58 PM
I thought you didn't want the government in your business. You should consider how much higher taxes are going to cost you versus paying the same as everybody for insurance before you truly take a position on this.


Oh Christ I forgot who this was. How are things at the IHOP :rolleyes:

4 dog related post 74 in POTUS, I forgot you know it all