Yesterday I wrote about the Waxman/Stupak political theater of the absurd involving the charges against earnings taken by Caterpillar and other big companies because of Obamacare. On a related note, House Energy and Commerce Committee ranking minority member Joe Barton released a staff memo indicating that four big companies under investigation by committee Democrats see incentives in dropping employer health care coverage thanks to Obamacare. Rep. Barton’s press release is here. The press release explains:
“Turns out ObamaCare means if you like your health plan you can lose it. The president didn’t have to actually strong-arm companies into dumping their employee health insurance because his bill carried financial incentives to virtually guarantee that result,” Barton said. “But something’s very wrong when, like AT&T found out, paying $600 million in penalties will allow you to stop paying $2.4 billion for insurance, leaving both workers and taxpayers stuck. I suppose we can’t know for some years how many thousands, hundreds of thousands or even millions of workers will lose their company insurance because of health care reform, but I know that it will be a breach of faith for most of them and a tragedy for some.”
The preliminary investigation by the Republican staff indicates:
1. “Each of the large employers under investigation warned that health care legislation would trigger reporting requirements (of pending losses) months before passage of the health care law.
2. “Internal company documents from each large employer under investigation reflect concerns over the health care legislation’s new taxes and effect on costs.
3. “Internal company documents indicate that there will be an incentive to drop employer health care coverage because the cost of providing coverage will be much larger than the penalty imposed by the health care legislation.”
For example, a presentation provided to investigators by AT&T shows that the company could save $1.8 billion annually by dropping coverage for current employees and paying the penalty imposed in the law.
A copy of the Republican staff memo can be found here.
The documents from AT&T can be found here.
The documents from Caterpillar can be found here and here.
The documents from John Deere & Company can be found here.
The documents from Verizon can be found here.
Robert Pear’s New York Times story on the corporate chargeoffs did a good job of covering one aspect of this press release. Pear touched on the remaining items by quoting Barton: “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.” Pear also took note of the documents flagged in the press release toward the end of his article:
In a general analysis of the new law, Verizon said, “To avoid additional costs and regulations, employers may consider exiting the employer health market and send employees” to state-run insurance exchanges, where people can buy insurance.
A Caterpillar executive made a similar point in an e-mail message to colleagues, saying the tax changes could “drive many employers to just drop coverage for retirees altogether, and let the government foot the whole bill.”
Yesterday’s press release points to evidence supporting this point. The press release thus opens a window onto an aspect of Obamacare that deserves additional analysis if not wider attention.