Immediately after the health care bill passed, some major corporations complained that the bill would cost them millions of dollars. AT&T claimed it would suffer a $1 billion loss. A new article in Fortune says these companies are considering dropping their employee benefit health insurance and paying the fine instead. They think it might be cheaper to “pay” than to “play.”
The Fortune writer, Shawn Tully, wrote “The legislation eliminated a company’s right to deduct the federal retiree drug-benefit subsidy from their corporate taxes.” Read that carefully. The corporations were deducting a government subsidy from their corporate taxes as if it were a cost. They’ve lost that “deduction,” which was actually bare-assed corporate welfare.
They’ve been doing this since January 2006, when the Medicare Part D act went into effect. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) had the government reimbursing employers 28 percent of the cost of retiree drug benefits that met certain requirements. But the same act also allowed employers to deduct 100 percent of the cost of prescription drug benefits, including the 28 percent that was subsidized by taxpayers already.
As Brad DeLong pointed out, this meant that for companies in the 35 percent tax bracket, $63 of every $100 spent on prescription drug benefits was being paid by taxpayers.
The just-passed health care reform bill closed the “double dip” and allows companies to deduct only that part of their prescription drug benefit costs they paid themselves. And now some of these companies are complaining that their business models will just about collapse if they can’t continue to deduct the subsidy, because just deducting the amount they actually spend on drug benefits will break them.
Of course, a gaggle of rightie bloggers jumped on this article as proof that Obamacare will destroy America, screaming about taxes and penalties, when what really happened is a cut in corporate welfare.
Now, it may very well be true that dropping employee health benefits and paying the penalties would be more cost effective for these companies, but it would have been even more cost effective for them to drop employee health benefits before there were any penalties. And they didn’t. And they didn’t because it would be harder for them to hire quality people if they don’t offer benefits. As long as that’s true, they’re going to offer benefits.
The other Big Lie implied in the righties’ screeds is that the health reform law will drive up health care costs more than they would have gone up otherwise. Ain’t so. Last year, the Kaiser Family Foundation estimated that without reform the average cost of an employee benefit family policy could go from $13,375 (the average in 2009) to $30,803 by 2019.
The Conservative philosophy:
Welfare is fine if it assists corporations.
Welfare for individuals is akin to theft/socialism/communism.
Since I’m unemployed again (since Tuesday), I’m thinking maybe I’ll incorporate all of the poor people. ‘I got plenty a time…’
If I head “Poor People, Inc.,” not only will I and all the poor benefit from the same assistance given to business corporations, as CEO, I could give myself a multi-million dollar bonus. What’ll I do to earn it? Same thing as the gangster-banksters and hedgehog fund managers who move numbers around do – I’ll track and move numbers. Hey, it’s fine for them, why not me, right? I’ll need help, so I’ll be hiring. Good salaries and bene’s. I’m a Liberal.
Anyone know any good corporate attorney’s who’ll help me get started? It’ll have to be pro bono for now, though…
Wait, “Poor People, Inc” won’t work.
How about “Oui Bee Kneady, Inc?” Nah, too French -and it sounds too much like ‘yes to honey bread.’
I got it! “Po’ Boy, Inc.” Nah, New Orleans has been too needy lately, what with Bush’s Katrina and now “Obama’s Katrina.”
WAIT!!! “US Citizens, Inc.” Let’s see them say “No!” to that!!!
At a certain point, it seems clear that the real problem for at least some of these companies doesn’t have anything to do with the dollars and cents of it; they just reflexively don’t want the government telling them they have to do anything. Just because.
Reality is that we live in a country that has chosen capitalism as its de rigueur economic system. As such, the sole responsibility of any American corporation, any small or large business, or for that matter any citizen, is to accrue capital – as close to the poison line as possible.
Ironically like the communist philosophy, the ends justify the means. It never ceases to amaze me that the champians of capitalism continually gripe about the means while at the same time theyre perfectly satisfied with the ends.
gulag …I’m sorry to hear about your employment situation..From what you’ve written in the past it’s clear that you have taken quite a beating in this shit economy over the last two years. I hope that things pick up for you, and that you get a break from the constant grind of financial hardship.
I don’t want to get all drippy and philosophical, but I do want you to know that you’re not alone with your burden and if good wishes do count for easing that burden…please know that you have mine.
Now on a less serious note.. For $17.00 you can purchase a Doctor of Divinity degree from Universal life Church and be on your road to riches. Nothing pays a higher dividend than The Lord Jesus Christ ,and a good prosperity gospel. Pressed down, shaken together, and overflowing! The more outrageous your claims in Jesus and his wonder working power, the greater your financial rewards will be.
Swami,
LOL! Thanks, I needed that.
Hmmm, a Doctor of Divinity? I could be like The Rev. Billy Sol Hargus, Imus’s character, back when he was nominally funny…
CAN AH GEHT AN AAAAAAAAAAAAAMEM?!?!?!?!?!?!?!?!
Gulag, You have my best wishes also; I am also in a bit of a log jam financially, even with 40 hrs per week, I can’t imagine getting a pink slip.
I’ll be looking into that divinity degree as back-up.
Thanks, Swami!
Gulag, I hope the next thing that comes along is work you love to do (and can’t believe you’re getting paid for!). When that happens, let me know what it feels like, OK? In the meantime, that mail-order divinity degree sounds like an awesome plan to raise capital for “U.S. Citizens, Inc.” I would like to be on your corporate board when the latter enterprise gets going.
As for maha’s post, the whining strikes me as typical of the American sector for whom the Endless Mardi Gras began in January 2001. “U.S. Citizens, Inc.” have been paying for corporate America’s beads & booze & morning-after beignets et cafe, and when we say we’re not going to pick up the tab for the beads anymore, they start screaming like toddlers in high chairs. Suddenly I understand the old admonition, “Knock it off, or I’ll give ya’s something to cry about!”
Joan, you’ll be a well compensated member on day 1!
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One final thought before I go to bed:
There’s nothing for either me or thee
‘Cause it all goes to Wall Street and the Army.
We’ve talked about corporate welfare here today. I’d also like to bring up the totally taxpayer subsidized “Warfare” program for the military industrial complex.
How much do we have to spend on defense before it becomes offensive? I know we’re nowhere near that point because we spend the equivalent of over a half-a-trillion dollars a year on it, year after year after year after year after year…
But:
When do we look at our schools and say enough?
When do we look at our cities and say enough?
When do we look at our roads and say enough?
When do we look at our airports and train lines and say enough.
When do we lok at our poor, our sick, our old, our handicapped, our disadvantaged and say enough?
When do we look at the under and unemployed and say enough?
When do we look at our hungry and homeless and say enough?
When do we look at college students looking at years of debt after graduation and say enough?
When will it ever be enough?!?!
THE WAR WE’RE STILL PREPARING AND PAYING FOR WILL NEVER HAPPEN! The Soviet Union is dead and buried for 20 years.
China deosn’t want to fight us, how will we ever pay them back? Sweet Jesus, even a stupid bookie knows that your last resort to collect money is to break something on the the person who owes and then can’t work to pay you off.
Why is our government dumber than the stupidist bookie?
ENOUGH ISN’T JUST ENOUGH. ENOUGH IS IS TOO MUCH ALREADY!!!!!!!!!!!!!!!!!
When do we stop fearing, and start dreaming?
Not until corporate welfare and military Warfare are dead and buried.
Rant over. Sweet dreams of social and economic justice to all…
Maybe the reason that companies think they can get by with dropping insurance now is that their employees can get in to the ‘exchanges’ and possibly be subsidized it low income. Insurance as corporate welfare of yet another kind. Will we ever get this ship righted???!?
Link on corporations from Consumerist:
http://consumerist.com/2010/05/the-3-classes-of-american-business.html
Cund, sorry to hear. I know it is hard, and I hope you get something soon.
Ooops, it should have read “Warfare Welfare.” What a knucklehead…
Bill, Thanks. I’m looking. But then I was looking even when I had the job. I’m hoping that there are jobs out there through the unemployment department that I’m eligible for.
And thanks to everyone for your kind thoughts. 🙂
cundgulag – The Cost of Modern War – total cost of WWII estimated at $1,384,900,000,000 would have been sufficient to pay for all of the following: (Of course the following are WWII dollars.)
A $16,000 house for every family in the US, Britain, France, Belgium, Spain and Portugal.
A $10,000,000 library for every city of 200,000 inhabitants and over in the US, Great Britain, and Russia.
A $50,000,000 university for each of these cities.
A $2000 automobile for every family in the US, Great Britain, France, the Low Countries, Denmark, and Norway.
The salares of 100,000 teachers and an equal number of nurses at $3000/year for 100 years.
A free college education at an estimated cost of $6000 for every boy and girl in the US from 17 to 21 yeas of age.
The figures are from my 1950’s college text book, “Western Civilization”. I wonder if a college text book in today’s America would ‘dare’ to include an equivalent table for (which war) Take your pick.