Companies looking at how their compliance with the provisions of the tangled mess that is the newly-signed “Obamacare” debacle are being affected are starting to announce that they’re going to take major hits to their bottom lines. From the Denver Post:
While most of the purported benefits of health-care insurance reform are years away, it took only a few days for a serious, unintended consequence to emerge.
Last week, telecommunications giant AT&T, which employs more than 280,000 people, announced it would take a $1 billion, non-cash, first-quarter loss because the bill ends an exemption on benefits for retirees.
Likewise, the largest maker of earth-moving equipment, Caterpillar, claims it will take a $100 million charge. Deere & Company, the world’s largest producer of agriculture equipment, will take a $150 million charge. 3M, maker of Scotch Tape and other products, says it will take a hit of as much as $90 million.
It’s all because a provision in the bill reduces the tax deductions for companies with drug coverage for their retired employees. The tax deduction and the subsequent government subsidies were designed to encourage those companies to keep their retirees covered rather than foisting them onto Medicare.
Now, it’s likely those companies and others will simply shuffle those once covered under the private sector to Medicare. If not, corporations could offset the costs with layoffs or shift the cost to consumers.
Boeing Co. is also going to take a hit. Theirs is going to be about $150 million which, they say, will likely reduce their earnings by 20 cents per share in Q1 of this year. That’s a big performance hit and a cash sink that the company has to find a way to cover or the market will react by lowering their stock price. I can hear the scoffs of our left-leaning colleagues but those stocks are what’s in people’s 401K’s and IRA’s. If the price on those stocks drops then so does the value of those retirement vehicles. If you’re 25 years old and just starting to invest that’s no big deal. But if you were planning to retire within the next 2-3 years, then you have no ability to recover from that kind of loss.
Of course, the Dems in Congress are moving to stomp on that kind of activity. Congressman Henry Waxman, (D-CA30) immediately issued letters to the CEO’s of Caterpillar, AT&T, Verizon, and Deere demanding they cough up their documentation. He says their estimates “appear to conflict with independent analyses.” What independent analyses? Here’s an idea: before Waxman starts issuing orders to private enterprise (something they’ve apparently gotten used to feeling entitled to do under the current administration) how about we see his documentation? Where are these independent reports? Who did them? Where did they get their information, considering it’s unlikely they have access to these firms’ accounting books? GOP congressmen have been accusing the Dems, Waxman in particular, of engaging in bullying tactics against companies who don’t toe the Dem line. Sure sounds like that’s the case to me.
This is only going to get worse. We haven’t even started with the rising health care premiums that are coming this way, particularly for the young adults. Elections have consequences, kids. Too late to do anything about the one in 2008 but you’re getting a second swing at bat here in about 8 months.