Big companies will drop employee coverage

More than once during the debate over nationalization of US health care, err Health Care Reform, oh excuse me, Health Insurance Reform, anyone with honesty and at least a two digit IQ pointed out that many employers would simply drop coverage and let their people go to the state run health care exchanges. “No”, said the Obamaites, “that won't happen.”

Well, realty has again raised its ugly head.

ATT, Verizon and other large companies are looking at simply cutting their losses by ending their health insurance coverage and sending their employees into an exchange.

Internal documents recently reviewed by Fortune, originally requested by Congress, show what the bill's critics predicted, and what its champions dreaded: many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government.

That would dismantle the employer-based system that has reigned since World War II. It would also seem to contradict President Obama's statements that Americans who like their current plans could keep them. And as we'll see, it would hugely magnify the projected costs for the bill, which controls deficits only by assuming that America's employers would remain the backbone of the nation's health care system.

Now the fact these companies are looking at dropping health coverage is understandable. Having a government which is hostile to production and targeting them make survival hard enough. However, this is the interesting comment from the article:

In the days after President Obama signed the bill on March 24, a number of companies announced big write downs due to some fiscal changes it ushered in. The legislation eliminated a company's right to deduct the federal retiree drug-benefit subsidy from their corporate taxes. That reduced projected revenue. As a result, AT&T (T, Fortune 500) and Verizon (VZ, Fortune 500) took well-publicized charges of around $1 billion.

The announcements greatly annoyed Representative Henry Waxman, who accused the companies of using the big numbers to exaggerate health care reform's burden on employers. Waxman, chairman of the House Energy and Commerce Committee, demanded that they turn over their confidential memos, and summoned their top executives for hearings.

But Waxman didn't simply request documents related to the write down issue. He wanted every document the companies created that discussed what the bill would do to their most uncontrollable expense: healthcare costs.

The request yielded 1,100 pages of documents from four major employers: AT&T, Verizon, Caterpillar and Deere (DE, Fortune 500). No sooner did the Democrats on the Energy Committee read them than they abruptly cancelled the hearings. On April 14, the Committee's majority staff issued a memo stating that the write downs were "proper and in accordance with SEC rules." The committee also stated that the memos took a generally sunny view of the new legislation. The documents, said the Democrats' memo, show that "the overall impact of health reform on large employers could be beneficial."

Nowhere in the five-page report did the majority staff mention that not one, but all four companies, were weighing the costs and benefits of dropping their coverage.

In other words several major companies are looking at simply paying a 2000 dollar bribe, err tax, err fine to get B Hussein Obama off their ass (for the moment) and sending us in the direction of a single payer system. And Waxman didn't want this shown in a hearing.

ATT had a simple PowerPoint slide explaining why this makes sense for the company:



In simple language, the critics and other opponents were right…this will lead to companies dropping coverage. Who would have thunk it!