Health Care News Guaranteed To Make You Sick

During the heated debate over Health Care, President Obama pledged to veto a reform bill with a price tag of $1 trillion or more because it would be too expensive. Democrats patted themselves on the back when they managed to keep the ten-year cost figure at $940 billion. They based the number on the Congressional Budget Office's gross cost estimate in March before the passage of the reform bill. The net cost estimate was $788 billion. Now the other shoe has dropped and Democrats are doing some serious backpedaling.

On Tuesday, the CBO revisited its estimates in response to a request from California Rep. Jerry Lewis. After more study, the CBO tacked on another $115 billion in discretionary spending over ten years, sending the cost of the Health Care Reform bill soaring into the stratosphere. The overhaul now will likely exceed $1 trillion. Remember this is only a guess. In nearly all cases where long term projections are required, the CBO has a lousy track record. It usually underestimates the expenditures by wide margins.

Now Democrats are trying to bury the $1 trillion figure under a mound of political double talk. Some preached the mantra of deficit reduction when the reforms are implemented. This argument holds that the higher the health care reform price tag the bigger the reduction in bloated federal spending. Only someone with absolutely no understanding of a budget would fall for that one. Other Democrats trotted out the argument that since many programs in the bill are discretionary, the funds won't necessarily have to be spent. That is just a cover up. Of course, the money will be spent. Check to find out the last time Congress failed to fund any entitlement program. Never has happened.

Health Care Reform, already a burning issue in Congressional elections, just became a blazing hot iron that can be used to brand Democrats as big spenders intent on saddling the voters with a mountain of debt. Months ago the Democrats scrapped their strategy of touting Health Care Reform passage in the wake of polls that showed how deeply unpopular the bill was with the public. Republicans should hang the $1 trillion price tag around the neck of every Democrat running for election.

Meanwhile, a federal district judge in Florida has promised to fast track the legal challenges filed by 18 states, claiming the Health Care Reform bill is unconstitutional. The challengers pinpointed the the reform provision that mandates individuals must purchase health care insurance beginning in 2014. Hearings are expected to begin in November at the earliest. The Justice Department, which will defend the bill, can be counted on to delay any proceedings until after the November elections.

Amongst all the legal and political wrangling, the clock is ticking on tax changes scheduled to soon begin hitting the pockets of Americans. There are 16 tax changes related to health insurance that are scheduled to be implemented from January 1, 2011 through 2020. Not all taxes, such as increases in Medicare taxes, are assessed directly on individuals. But the tab for billions of dollars in new fees to be imposed on pharmaceutical manufacturers and health insurance firms will be passed through to consumers in the form of higher charges. Only someone in government can't figure out that every dollar a business gets comes from a consumer or another firm. Unlike the federal government, businesses cannot simply print money to pay higher fees imposed by the legislation.

Democrats tried to shield themselves from an angry public by fashioning Health Care Reform in a way that delays taxes until after November's elections. No doubt the party thought it was a clever move. However, as the elections draw nearer, it is becoming clearer that Democrats are only fooling themselves. Health Care Reform is an albatross that will send many elected Democrats into an early retirement.

Businesses See Unhealthy Costs

After months of remaining silent for fear of retribution, big businesses are finally weighing in on the crippling impact of the Health Care Reform bill. It may be too little too late, but the corporate outcry underscores how the Obama Administration has grossly misrepresented the legislation's affect on millions of consumers, particularly seniors.

The ripple of business unrest is quickly turning into a tidal wave that threatens to bury any chances the Democrats have for selling the bill's benefits. Ironically, many consumers impacted by the changes will be retirees at some of the nation's biggest companies, including thousands of union workers who thought they would be the primary beneficiaries of Health Care Reform.

It all started innocently last week when John Deere Company said the new law would hike its costs by $150 million. That was followed by an announcement by Caterpillar that it would record a $100 million charge to earnings related to the legislation. That notion was seconded by AK Steel Holding Corp. and 3M Company. Then corporate giants Verizon and AT&T weighed in and the house of cards that was Health Care Reform began to crumble right before our eyes.

Here's what is distressing businesses: the new law will make a government subsidy the companies get for retiree drug coverage taxable in 2011. To may politicians, that may sound harmless, because after all, these huge firms have millions to throw around. But by some estimates, the health care costs may trim as much as $14 billion from U.S. corporate profits. However, the biggest losers will not be the businesses, but the many retirees who depend on their company-paid benefits.

So how come these same businesses were mute during the battle over health care reform? Take AT&T as an example. The company is heavily regulated, particularly at the federal level where the Federal Communications Commission holds sway over a huge amount of the firm's fortunes. If AT&T had assumed a high profile position, attacking the bill as anti-business, would the Obama Administration stood still when Democrats control the FCC? Of course not. The administration would have used its leverage to silence dissent.

Now the reform bill is law and the once silent firms are free to complain all they want. Last week, AT&T announced it would book a $1 billion charge to first quarter earnings. This will be a non-cash expense, meaning the company does not actually have to make a $1 billion outlay. However, because of the charge, the company said it was considering changes to the benefits it offers current and retired employees.

An AT&T spokesperson added, "As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health care benefits offered by the company."

If you don't think this is a big deal, consider this: AT&T carries a liability of $27.8 billion on its balance sheet for post-employment benefit obligations for its current and future retirees. The number includes pension payments, but a healthy chunk of those billions are medical benefits that may soon disappear.

In fact, AT&T sounded a warning in its recently released annual report. "The final outcome of the legislation (health care reform) could cause negative impacts to our results and bring uncertainty to our future costs," the company said in its management's discussion and analysis of financial conditions.

About 58 percent of AT&T's 281,000 employees (as of January 31) are represented by the Communications Workers of America. A spokesperson for the union claimed workers' health benefits were locked in because of labor contracts. But those contracts will be expiring over the next two to three years.

While the union representative claims may be true today, there is little incentive for the company to continue to pay for future benefits that are now taxable. Retirees, many probably members of the same AARP that supported the legislation, will find out soon they were sold down the river by the nation's largest senior citizen lobbying organization.

Yet President Obama continually told a skeptical public that his health care reform bill would not change workers' current coverage. Less than two weeks since the passage of the legislation, this is turning out to be another misrepresentation.

How many more will be exposed in the days and months ahead?

Factoids That You Can Use

The Federal and State governments already control nearly 60 percent of health care spending. These programs are riddled with fraud, waste and abuse. Each year Medicare fraud exceeds $60 billion. More than $32 billion in Medicaid funds each year are spent improperly. Yet the Congress just voted to increase government control of health care spending. Does that worry anybody?