The price of health-care reform: AT&T to take $1 billion charge
Telecom giant AT&T said today that it would be forced to record a $1 billion non-cash charge on its first-quarter earnings to account for increased costs associated with the health-care legislation signed into law earlier this week by President Obama.
The company also said it may have to cut health-care benefits to employees and retirees.
You've already seen some of this: Caterpillar, John Deere and Valero said they would have to take balance-sheet charges because the bill will increase the cost of health-care benefits to its employees. Also today, 3M said it would take a charge of up to $90 million. AT&T's charge is the biggest so far.
AT&T said it will be set back by $1 billion because the health-care bill changed the way Medicare subsidies are taxed.
Let me be clear about this, as our president says: A $1 billion charge against a balance sheet is a big, big deal. Even for a company as big as AT&T, which is worth about $154 billion.
Quoting from AT&T's filing today with the SEC:
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.
Much of the coverage of the year-long health-care legislation process focused on the political horse race, the morality of universal coverage, an examination of how other countries do things and so on. Little attention, frankly, was given to the cost that businesses will have to bear because of Obama's signature. And don't be fooled into thinking that only huge corporations such as AT&T will be affected; smaller businesses -- which provide the bulk of U.S. employment -- will be affected as well. And in a stagnant economy that is struggling with unemployment near 10 percent, that's a real concern.
You're going to see more announcements like AT&T's.
Follow me on Twitter at @theticker
March 26, 2010; 5:35 PM ET
Categories: Congress , Obama , The Ticker | Tags: 3M, AT&T, Obama, healthcare legislation, what is the cost of healthcare reform
Save & Share: Previous: GDP + consumer confidence numbers = stagnation
Next: Stocks up at opening following consumer spending news
Posted by: mpohl | March 26, 2010 6:32 PM | Report abuse
Posted by: njdion | March 26, 2010 6:51 PM | Report abuse
Posted by: limesparks | March 26, 2010 7:00 PM | Report abuse
Posted by: lunatique7 | March 26, 2010 9:50 PM | Report abuse
Posted by: marde1 | March 26, 2010 10:30 PM | Report abuse
Posted by: limesparks | March 27, 2010 12:59 AM | Report abuse
Posted by: lunatique7 | March 27, 2010 9:56 AM | Report abuse
Posted by: coqui44 | March 28, 2010 1:18 AM | Report abuse
Posted by: weiwentg | March 28, 2010 11:01 AM | Report abuse
Posted by: Daisy5 | March 28, 2010 3:53 PM | Report abuse
Posted by: stevedwight | March 28, 2010 10:33 PM | Report abuse
Posted by: rg019571 | March 29, 2010 1:27 PM | Report abuse
Posted by: Daseinen | March 29, 2010 4:04 PM | Report abuse
Posted by: hanocul6 | March 30, 2010 12:32 PM | Report abuse
Posted by: Daseinen | March 30, 2010 5:07 PM | Report abuse
The comments to this entry are closed.