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Obama Acknowledges Company Charges Due to Healthcare Reform

Posted by Larry Doyle on May 4, 2010 12:45 PM |

Not that you would find it in any media outlets (believe me, I’ve looked for the last hour), but earlier today President Obama publicly acknowledged that American companies will be forced to take immediate charges to income from the recently enacted healthcare reform.

Recall that members of Congress railed on a number of corporate executives for highlighting these charges shortly after the legislation was passed. Rep. Henry Waxman initially called a special meeting to castigate the corporate executives, but then tucked his tail between his legs and cancelled that meeting when it became apparent that he did not truly understand the basic accounting principles necessitating these charges.

Fox News highlighted this mid-April development in writing, Canceled: Hearing That Would Have Grilled CEOs on Healthcare:

Energy and Commerce Committee Chairman Henry Waxman, D-Calif., has canceled a hearing intended to grill CEOs who took a charge against profits because of the health care reform bill.

The cancellation came after they realized what everyone already knew – that the companies were required to do what they did because of accounting rules. Waxman and others had reacted with outrage and accused the companies of doing it – in essence, to make health care reform look bad.

AT&T took a $1 billion charge and other companies including Caterpillar, John Deere, and Valero Energy, and 3M took hundreds of millions in charges because of the health care reforms.

In addressing the Business Council today, President Obama initially addressed apprehending the suspect in the New York City bombing attempt, prior to speaking about the economy, jobs, and the oil spill. All of those topics received media coverage.

I will admit my jaw dropped when early on in his remarks I heard him acknowledge the reality of these corporate charges for healthcare. Did he willingly acknowledge these charges, or was he compelled to make this point by the executives themselves during a dinner last evening?

We certainly did not hear much about these charges during the healthcare debate. Can you say media control? However much like that proverbial tree falling in the forest, if the media does not report it, can the White House admit it never happened?

You can say what you want about healthcare, but the simple fact is these immediate multi-billion dollar charges are a jobs killer . . . and I thought jobs were supposed to be the highest priority in Washington. Obviously not, although nobody would have known that unless you were actually watching his speech.

Truth, transparency, and integrity in our general media? Why would they want to do that?

LD

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  • Dan Jamieson

    Larry, I think you may have been spun by some corp. interests who had enjoyed a double-sweet subsidy.

    My understanding is, the Medicare prescription drug act pays companies 28% of their retirees drug costs. Then, unusually, the cos. write that amount off, as if they paid it themselves. The new healthcare law kept the subsidy, but ended the “write off.” The resulting charge-offs, from the impending higher tax liabitly, were concentrated in the latest quarter, and will not be reappearing to a great degree, from what I’ve read. These are non-cash charges.
    Naturally, some corps. were sorry to see this sweet deal taken away.

    –The new healthcare law, relevant section:
    http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000139—A000-.html

    SEC. 9012. ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE
    TO MEDICARE PART D SUBSIDY.
    (a) IN GENERAL.—Section 139A of the Internal Revenue Code
    of 1986 is amended by striking the second sentence.
    (b) EFFECTIVE DATE.—The amendment made by this section
    shall apply to taxable years beginning after December 31, 2010.

    –See Medicare drug law
    http://www.ssa.gov/OP_Home/ssact/title18/1860D-22.htm

    (3) Employer and union special subsidy amounts.—
    (A) In general.—For purposes of this subsection, the special subsidy payment amount under this paragraph for a qualifying covered retiree for a coverage year enrolled with the sponsor of a qualified retiree prescription drug plan is, for the portion of the retiree’s gross covered retiree plan-related prescription drug costs (as defined in subparagraph (C)(ii)) for such year that exceeds the cost threshold amount specified in subparagraph (B) and does not exceed the cost limit under such subparagraph, an amount equal to 28 percent of the allowable retiree costs (as defined in subparagraph (C)(i)) attributable to such gross covered prescription drug costs.

  • Mike

    I do remember hearing about AT&T having to cough up a billion a little while back. It had to have been expected that this would NOT increase hiring..

    Also, the fact that this healthcare bill has NO public option makes it effectively worthless. Many of us are still one broken leg away from financial ruin, nor can anybody else afford insurance better than they could 6 months ago. It seems like insurers got a nice pay day but I don’t see much else out of it.

    Entry level corporate jobs which provide livable salary and health insurance are VERY far and in-between, and have the largest competition pool.






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