Tracking the true cost of the health-care legislation
This is a story I waded into last week and am going to continue to follow because it's really important: How much will the just-signed health-care legislation end up costing corporations? Which is another way of asking: How much is it going to end up costing you, as corporations pass on their costs to consumers and weigh cutting benefits to employees to offset the new government requirements?
Last Friday, I reported that telecom giant AT&T said it is taking a $1 billion non-cash charge against its first-quarter earnings because the new health-care legislation removes the tax deduction on Medicare D subsidies that find their way to AT&T retirees. AT&T joins other big companies -- Valero, 3M, John Deere and so forth -- in reporting big charges.
Here's a no-bull fact you must know: Publicly held corporations are required by SEC regulations to report such good-faith estimates of anticipated charges that could affect stock price. So that's what these companies are doing. They're looking at the new law and doing the math. The new health-care law doesn't take effect until 2013, but the companies are planning ahead.
Of course, there are those who believe the corporations are simply playing politics and not acting in good faith with their shareholders and the government.
Rep. Henry Waxman (D-Calif.) and Rep. Bark Stupak (D-Mich.), for instance.
My former colleague Elizabeth Williamson, now at the Wall Street Journal, blogged this item on Friday, reporting that Waxman and Stupak plan to hold an April 21 hearing to probe "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.”
The "independent analyses" they may be referring to are the CBO estimates, but, as former CBO director Douglas Holtz-Eakin wrote in the New York Times last week, the CBO crunches the numbers it gets. It does not vouch for their plausibility:
"The answer, unfortunately, is that the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out."
So this is going to continue to play out. Maybe the smartest thing ever said to me on the cost of health-care reform was told to me by Dave Walker, former U.S. comptroller and deficit hawk, in an interview I did with him in August 2009. Walker said:
"By definition, expanding coverage will increase health-care costs, not decrease health-care costs."
And he probably wasn't even talking about the private-sector costs that we're now beginning to see.
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March 29, 2010; 11:42 AM ET
Categories: Congress , Corporations , Deficit/debt , The Ticker | Tags: 3M, AT&T, Bart Stupak, David Walker, Henry Waxman, John Deere, Obama, Verizon, cost of healthcare reform, debt, deficit
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