Pants On Fire

A lot of noise has been made on the right about the supposed millions of dollars yearly it's going to cost businesses thanks to Obamacare.  Caterpillar claims they will have to take a $100 million charge just this year.  AT&T claims they will have to write off a cool billion dollars in health care costs.  They are claiming they will have no choice but to drop prescription drug coverage for retirees.

There's only one problem.  It's all a snow job.

The provision upon which they're basing this claim closes a loophole written into Medicare Part D legislation when Republicans controlled Washington. And though the change will cost the companies a small of money each year, it doesn't take effect until 2013--the figures the companies released last week reflect the total sum of the costs over several years. And as a result, House Energy and Commerce Chairman Henry Waxman has welcomed executives from these companies to defend their claims on Capitol Hill.

Several firms have indeed claimed the reforms will cost them big bucks before the year is out. AT&T said "Included among the major provisions of the law is a change in the tax treatment of the Medicare Part D subsidy," in an SEC filing, adding that the company "intends to take a non-cash charge of approximately $1 billion in the first quarter of 2010 to reflect the impact of this change."

Verizon notified its employees by email that they may see changes to their benefits. The new law, they wrote, "may have significant implications for both retirees and employers," because of changes it makes to federal tax treatment of Medicare Part D subsidies.

The list goes on. But the reality is less striking than the enormous figures indicate.

When Part D was enacted in 2003, it contained a number of heavily criticized boondoggles for big businesses, but one such loophole offered companies subsidies to continue providing prescription drug benefits to retirees...and made those subsidies tax deductible.

Fast forward to 2010, the newly signed health care bill doesn't end the subsidies, or change the fact that those subsidies are tax free--it simply ends companies' ability to deduct them. The money that companies spend out of their own pockets on prescription drugs under Part D is still tax deductible.

In preparing for the hit, though, companies have summed up the permanent cost of this tax change and plan to write it down all at once. Now, conservatives are citing that overall cost to suggest that these companies will have to bear a billion dollar burden every year. And, of course, the kicker is that this change will not take effect under the terms of the law for three years. 

In other words, the GOP is lying to you again in order to try to make this look much worse than it really is.  There's a shocker, distorting the truth around Obamacare!

Good thing the Dems have called these CEOs out.

Waxman has invited the CEOs of four companies--AT&T, Verizon, John Deere, and Caterpillar--to defend their claims before his committee when Congress returns from recess next week. We'll look closely at what they have to say. 

Should be an interesting day on Capitol Hill.