Immediately following the passage of Obamacare into law, several companies reported major hits to their finances that were going to come as a result of the new law. Henry Waxman and other Democrats responded quickly, condemning the companies and accusing them of misreporting in order to make the new law look bad. Now comes a report – from the Democrats’ own staff – that the companies were not only correct in their assessment but that current accounting practices required them to make those reports.
Representative Henry A. Waxman of California and Bart Stupak of Michigan, both Democrats, opened an investigation and demanded that four companies — AT&T, Caterpillar, Deere and Verizon — supply documents analyzing the “impact of health care reform,” together with an explanation of their accounting methods.
The documents — hundreds of pages of e-mail messages and financial worksheets — include large amounts of data that substantiate the companies’ concerns. They have reignited a battle over the law in Congress.
Representative Joe L. Barton of Texas, the senior Republican on the House Energy and Commerce Committee, said, “From a financial standpoint, from a purely economic standpoint, many companies would be better off discontinuing health care as a fringe benefit, paying the penalty and pocketing the savings.”
In a memorandum summarizing its investigation, the Democratic staff of the committee said, “The companies acted properly and in accordance with accounting standards in submitting filings to the S.E.C. in March and April.”
Waxman, Stupak, and the others who were demanding the CEO’s of those companies appear before them to explain are now canceling those hearings and are trying to spin the whole thing away. The fact of the matter is that the companies were completely correct in their accounting. Which raises a couple of questions.
First, the numbers now make clear that the criticism raised by Republicans that the law would incentivize companies to simply drop their employees’ health benefits all together was on the money. The reports submitted by the companies in question show that they are – for now – spending far more on employees’ insurance than they would pay in penalties if they were to stop providing it completely. From a shareholder’s view – and let us not forget that a lot of Americans are shareholders through their retirement plans – continuing to provide health insurance is a larger expense and, therefore, a larger impact to company profits. Since the bottom line is, well, the bottom line what responsible Board of Directors and CEO would opt to continue to offer the insurance under those conditions?
Second, the fact that Waxman, et al., was outrageously outraged by the initial reports tells you all you need to know about how well they understood the bill they fought tooth and nail to pass. The idea that companies would be better off, financially, to pay the penalties than offer insurance is also something they clearly didn’t get before, in spite of being warned about that explicitly. What about the other complaints raised by Republicans during this whole debacle? The fact that Obamacare wouldn’t “bend the spending curve down” has been confirmed by Obama’s own HHS actuarial department and now this report confirms the financial hits companies are taking, as predicted by Republicans. Perhaps the GOP got quite a bit more about this disastrous legislation, too.