First-quarter balance sheets will look dismal
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It didn't take long for businesses — especially in Illinois — to start feeling ObamaCare's job-killing punch. While most of the punishing mandates and taxes don't start immediately, public accounting rules operate on a more timely basis. Some businesses have disclosed that their value will be negatively impacted by the new health reform law.
In the last week, four major Illinois-based companies —Boeing, Caterpillar, Deere & Co. and Illinois Tool Works — have announced they will take charges of $150 million, $100 million, $150 million and $22 million, respectively, because of one provision in the new law.
In order to pay for the plan's estimated $924 billion cost, the tax deduction for companies providing their retirees with drug benefits has been reduced. The White House said this change closed a tax "loophole" created to encourage companies to provide their retirees with drug benefits rather than moving them into Medicare's prescription drug program.
Having exhausted their large bag of accounting gimmicks, congressional Democrats slashed this tax incentive to raise an estimated $4.5 billion over the next 10 years.
While this looked good on paper, the New York-based consulting firm Towers Watson conducted a study that found this tax change will cost companies $14 billion in future years. That's a job-killing hit to Illinois businesses and employees already struggling with a 12.2percent unemployment rate.
It's estimated that 6.3 million retirees currently receive drug benefits from their former employer's health plan. As a result of ObamaCare, many companies are expected to curtail or end these drug benefits and instead push them onto Medicare's drug program, where taxpayers will foot the bill.
The Moran Co., a Washington-based health care consulting firm, believes drug benefits will be altered for 1.5 million to 2 million retirees because of this tax change. These retirees will join Medicare Advantage policyholders and millions of others whose benefits are up in the air as a result of ObamaCare.
We soon may begin to see the negative impacts of just this one provision in the health care reformplan: jobs may dry up as businesses lose value, millions of seniors will lose the drug coverage they currently enjoy, and the burden on taxpayers will increase due to more people on Medicare Part D.
And on top of that, these companies are facing political pressure because of the plan.
The companies' public disclosures — in filings to the Securities and Exchange Commission — are required by law. Failure to promptly report a charge carries stiff penalties, and no doubt would open the company up to potentially expensive litigation.
Rather than acknowledge the legal realities businesses face, congressional Democrats led by Henry Waxman of California and Bart Stupak of Michigan are applying political pressure by hauling some CEOs before Congress to explain why they say their companies are taking this charge because of ObamaCare.
That puts businesses in a lose-lose situation: follow the law, report the charge and endure a congressional grilling, which may lead to who knows what. Or they could ignore the law and not report the charge, which would place the company and its executives in legal jeopardy but spare them a congressional investigation. Either way, American business loses and the health reform law will prove to be the job-killer many Americans feared.
Grace-Marie Turner is president of the Galen Institute, a free-market research organization on health policy. It is funded in part by the pharmaceutical and medical industries.
In the last week, four major Illinois-based companies —Boeing, Caterpillar, Deere & Co. and Illinois Tool Works — have announced they will take charges of $150 million, $100 million, $150 million and $22 million, respectively, because of one provision in the new law.
In order to pay for the plan's estimated $924 billion cost, the tax deduction for companies providing their retirees with drug benefits has been reduced. The White House said this change closed a tax "loophole" created to encourage companies to provide their retirees with drug benefits rather than moving them into Medicare's prescription drug program.
Having exhausted their large bag of accounting gimmicks, congressional Democrats slashed this tax incentive to raise an estimated $4.5 billion over the next 10 years.
While this looked good on paper, the New York-based consulting firm Towers Watson conducted a study that found this tax change will cost companies $14 billion in future years. That's a job-killing hit to Illinois businesses and employees already struggling with a 12.2percent unemployment rate.
It's estimated that 6.3 million retirees currently receive drug benefits from their former employer's health plan. As a result of ObamaCare, many companies are expected to curtail or end these drug benefits and instead push them onto Medicare's drug program, where taxpayers will foot the bill.
The Moran Co., a Washington-based health care consulting firm, believes drug benefits will be altered for 1.5 million to 2 million retirees because of this tax change. These retirees will join Medicare Advantage policyholders and millions of others whose benefits are up in the air as a result of ObamaCare.
We soon may begin to see the negative impacts of just this one provision in the health care reformplan: jobs may dry up as businesses lose value, millions of seniors will lose the drug coverage they currently enjoy, and the burden on taxpayers will increase due to more people on Medicare Part D.
And on top of that, these companies are facing political pressure because of the plan.
The companies' public disclosures — in filings to the Securities and Exchange Commission — are required by law. Failure to promptly report a charge carries stiff penalties, and no doubt would open the company up to potentially expensive litigation.
Rather than acknowledge the legal realities businesses face, congressional Democrats led by Henry Waxman of California and Bart Stupak of Michigan are applying political pressure by hauling some CEOs before Congress to explain why they say their companies are taking this charge because of ObamaCare.
That puts businesses in a lose-lose situation: follow the law, report the charge and endure a congressional grilling, which may lead to who knows what. Or they could ignore the law and not report the charge, which would place the company and its executives in legal jeopardy but spare them a congressional investigation. Either way, American business loses and the health reform law will prove to be the job-killer many Americans feared.
Grace-Marie Turner is president of the Galen Institute, a free-market research organization on health policy. It is funded in part by the pharmaceutical and medical industries.
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