Tuesday, March 30, 2010

The New Health Care Law: Intendended and Unintended Consquences

The response of many companies to the new Health Care law will have many intended and unintended consequences. The letters from Congressman Waxman, an almost dictatorial response, are typical of what we expect as things mature in this area.

Just look at the Waxman edict to Verizon wherein he demands:

To assist the Committee with its preparation for the hearing, we request that you provide the following documents from January 1,2009, through the present: (1) any analyses related to the projected impact of health care reform on Verizon; and (2) any documents, including e-mail messages, sent to or prepared or reviewed by senior company officials related to the projected impact of health care reform on Verizon. We also request an explanation of the accounting methods used by Verizon since 2003 to estimate the financial impact on your company of the 28% subsidy for retiree drug coverage and its deductibility or nondeductibility, including the accounting methods used in preparing the cost impact released by Verizon this week.

Just imagine how much this will cost Verizon! And where do you think the money will come from, the rate payers. Not only do we get slammed by Health Care legislation but we get slammed by Waxman by making an incredible workload even greater. Waxman, a man who never created a single job, is creating overhead which will further reduce corporate value. Was this intended or unintended?

The issue is simple. To pay for the new Bill, the Congress eliminated the tax deductibility of drug benefits from corporations, and thus what Verizon and all others had anticipated as a deduction to their employees and retirees was now a charge and thus they had to report it to shareholders! Waxman took umbrage with this. You really cannot make this up!

Waxman further asserts:

After the President signed the health care reform bill into law, your company told its employees that provisions in the law could adversely affect your ability to provide health
insurance. A Verizon executive vice president sent an e-mail to all Verizon employees stating that "we expect that Verizon's costs will increase in the short term" as a result of health care
reform. Verizon also cautioned employees that "changes affecting the Part D subsidy will make it less valuable to employers, like Verizon, and as a result, may have significant implications for both retirees and employers.

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. The Congressional Budget Office has reported that companies that insure more than 50 employees would see a decrease of up to 3% in average premium costs per person by 2016? The Business Roundtable, an association of chief executive officers from leading U.S. companies, asserted in November 2009 that health care reform could reduce predicted health insurance cost trends for businesses by more than $3,000 per employee over the next ten years.

Will these people ever learn? The get the "facts" they want when the hold Congressional hearings, and if perchance something else is introduced they damn it on the spot. So will they learn? Doubtful!

The main question is what else will we find here!