Remedial Economics with Obamacare

Friday, March 26, 2010 , , 7 Comments

Some of us obviously need a refresher in Econ 101 (Ben Bernanke, OMGObama if he ever actually took it, Nancy Pelosi, etc etc) but it's all good; Obamacare is here to teach us that there is no "something for nothing". Pelosi should probably listen to the lesson twice.


AT&T Inc (T.N) said on Friday it would record a $1 billion non-cash charge for the current quarter related to the new U.S. health care reform law, as lawmakers called on the company and three other large employers to testify about expected cost hikes.

AT&T's charge appeared to be the largest in a series of charges announced by U.S. companies this week.

A House Energy and Commerce subcommittee said on Friday it will call on the chief executives of AT&T, Caterpillar (CAT.N), Verizon (VZ.N) and Deere (DE.N) to testify on April 21 about how the reform might adversely affect their ability to provide health insurance.

"The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern," the subcommittee said in the letters.

AT&T, whose annual revenue is expected to be $124.1 billion this year, said the charge is the result of a provision in the law related to the tax treatment of Medicare subsidies.

And where, exactly, are companies supposed to come up with the difference? Public company accounting - in case you are not aware, I'll save you the filthy GAAP details - is not like government (fund) accounting. While the Obama administration may have the advantage of a conveniently-located printing press in town at Bernanke's place and fund accounting on its side, public companies actually have to make balance sheets balance and put something aside or borrow to comply with this awesome new health reform plan.

Way to encourage economic growth, Washington.

Money that could have easily gone into infrastructure, technology, inventory, human capital, or R&D ends up going to Washington (as if the printing press and fund accounting weren't pay day enough in DC. Here's a hint: there is never enough) to be redistributed. Partially to the IRS to pay all these new "auditors".

See where we've gone wrong yet?

And hey! All you asshat iPhone users can also blame Obamacare for the ever-crappier network you'll be on as AT&T will, naturally, have to take $1 billion from somewhere else.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Anonymous said...

Huh? I thought you could expand coverage, add 20-30 million new people that can't afford coverage, add 150 new government agencies, and 16,000 new IRS agents and still save money. He said so.

Anonymous said...

Do a little more research. A tax loophole was closed.

Anonymous said...

My research tells me that money's coming from somewhere. If you accept smoke and mirror accounting you are correct. It's magic.

Actually, Anon at 9:47a, it is my understanding that this money is being set aside for retirees and "entitlement" programs (funny that the government doesn't have to fund ITS entitlement programs but companies do). This doesn't even begin to cover current employees and the truth is no one knows what the true, long-term impact of this "reform" will be.

I have a feeling it starts with "$$$$" and ends with "oh fuck" but frankly I just don't have the time to dissect 2200 pages.

Having read and dissected the stimulus bill, I have a pretty good idea what this thing is full of.

KingMax said...

AT&T and other companies' claimed "cost increases" should be clarified so people really understand the issue. In 2003, under the drug plan legislation, these companies received a 28% subsidy for the cost of their payments to retiree drug plans. In addition, they were able to continue to deduct the full amount of the payment to the plan. Following is an example of what this meant: An expense of $100 is paid for retiree drugs as provided for in AT&T's contract with employees. The government then gave the company $28 towards payment of the expense; net cost to the company: $72. But AT&T was still able to deduct the full $100 from their income, even though they only paid $72. In other words, they were able to deduct a $28 charge from their income even though you and I, other taxpayers, paid that $28. This is just plain wrong and the 2010 healthcare legislation simply closed the loophole. Incidentally, they still get the $28 subsidy, which you and I are paying for. When these companies claim they'll have to cut healthcare benefits, lay people off, etc., then blame it on this healthcare legislation, they are being fundamentally dishonest. What they’re really doing is using this healthcare legislation as an excuse to make further cuts to wages and benefits in their ongoing race to the bottom.
You may want to sign up for aremedial economics course yourself.

I stand corrected.

Anonymous said...

millions will lose some or all of their health care because of Obamacare.