The aftermath of passing health insurance reform may take weeks to settle.
Some of the largest businesses in the United States are reporting higher health care costs because of the passed legislation. Last week, AK Steel Corporation, Caterpillar Inc., Deere & Co., Verizon and Valero Energy announced that their health care spending would increase by millions. Now AT&T will be taking a $1 billion non-cash accounting charge to pay for the overhaul.
A spokesperson from AT&T says that the charge is a result of the way Medicare subsidies will now be taxed according to the Associated Press and USA Today, Companies that provide drug benefits for retirees receive subsidies covering 28 percent of the costs. Prior to the legislation, these subsidies were tax deductible but now companies will only be able to deduct the 72 percent of drug costs.
In response, AT&T may stop providing drug coverage for retirees and change active employees’ health insurance plans. It will be a few years before AT&T can implement any changes because AT&T is the biggest private employer of union members. Union workers’ contracts end in 2012 and AT&T will then be able to renegotiate health care benefit packages.
Lawmakers aren’t very happy to hear about these reported higher health care costs. U.S. Representatives Henry Waxman and Bart Stupak are requesting companies to attend a meeting on April 21 to discuss these changing health care costs and to send an explanation for the rising costs by April 9.
Congressmen Waxman and Stupak wrote to the company executives, “The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern. They also appear to conflict with independent analyses. ”
Hopefully the meeting will clear the air between lawmakers and executives and determine how this overhaul will affect businesses.