From the American Benefits Council, which represents large U.S. corporations, a news release, “Exorbitant accounting hit to businesses will continue unless health law’s retiree drug subsidy provision is reversed“:
“For months, the American Benefits Council, along with several employers and labor unions, warned that the retiree drug subsidy tax in the health care legislation would impose an enormous hit on company financial statements as soon as the bill was signed into law,” Council President James A. Klein said today. “The recent announcements by major U.S. companies have captured Wall Street’s attention, while the Obama Administration fails to acknowledge their significance. Since the president has made clear that job creation is his top priority, we urge the Administration and Congress to remove this obstacle to economic recovery.
“Over the next several days, many companies will be compelled to either take a hit on their earnings or decide to move retirees into the Medicare Part D program.” Klein said. “As our recent research report clearly shows, as more retirees are moved from employer plans to Medicare Part D, government outlays will increase, and the shift from employer retiree drug subsidy programs to Medicare Part D is likely to be significant. In the end, this so-called revenue raising provision may actually cost the government money.” A separate study, conducted by the Towers Watson consulting firm, reported that unless companies change their benefit plans, the aggregate accounting charge would be nearly $14 billion.
Safe prediction, Mr. Klein. Today’s news is: “Boeing Expects $150 Million Charge In 1Q For Health-Revamp Impact.” More …
- Wall Street Journal, “The ObamaCare Writedowns—II“
- John Fund, Wall Street Journal Political Diary, “Waxman Convenes the First Death Panel“
- Chicago Tribune, “Companies reveal big hits to earnings over health care“
- Newark Star Ledger, “Reform has firms rethinking benefits“