Why Are Large Corporations Worried About Health Insurance Reform?
Posted: Monday, April 05, 2010
by Yamileth Medina
VitalOne Health
They are very concerned about the current and future impact of healthcare reform. In fact, they want part of it repealed. These aren't concerned citizens or Tea Party activists; rather, these are the heads of major American corporations.
Most large corporations already offer group health insurance to their full-time employees. Therefore, the mandate that they offer coverage to their employees is not severe. Also, these corporations tend to be publicly apolitical: after all, they want to sell to both liberals and conservatives. A primary argument against health reform--that the federal government is over-involved--appeals to many businesses, but those ideological concerns are less important.
There is one specific tax change that worries them. The legislation reduces the subsidies companies receive in order to cover prescription medications for retired employees. Large employers are most likely to offer such extended coverage for the retired.
Well-known companies, such as Caterpillar and AT & T, appear to have been shocked by the changes. After the bill passed, they had to re-file their quarterly earnings reports in order to indicate the higher amount of charges resulting from the loss of the subsidy. These millions of dollars charged against future profits (thereby reducing profit margins) will not take effect until 2014, but standard accounting practices require that they be announced as soon as they are known.
These corporations are calling for Democrats to repeal that particular provision of the health insurance reform bill, because it has the potential to hurt job creation. However, the Obama administration thinks that it is simply closing a loophole. For the past several years, corporations have simultaneously had their drug coverage for retirees subsidized and had the ability to write off the amount on their tax returns.
The big issue comes down to the numbers. Administration officials say that the change will raise nearly $5 billion over the next decade, essential to help cover the cost of affordable health insurance legislation. Meanwhile, the American Benefits Council claims that it will cost companies $14 million.
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Top-level comments on this article: (1 total)"Job Creation" is a red herring. Look at their profits!Thank you for your comment. Many would agree that these large companies could probably hire more people if they wanted to, but that's the downside of efficiency. Not only technology, but American workers themselves becoming better at their jobs!
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