Documents reveal AT&T, Verizon, Caterpillar and Deere are considering droping health care coverage

mlmpetert

So this is about a month old, but i no longer have cable and have been pretty out of touch with current events lately.

I was listening to a health care sector analyst and a employee benefits consultant a week or so ago. This was one of the topics. Currently health care reform takes into consideration that most or at least a lot of small business are going to drop employee healthcare insurance from their employee benefit offerings. It does NOT take into consideration big companies dropping health care insurance as a benefit.

If you have a business with less than 50 employees and do not offer healthcare insurance you are NOT subject to a fine. If you hire that 51st employee you have to pay a 2k penalty for each employee you have, so that 51st employee cost you 100k or the cost to cover everyone, which is likely more than 100k. (Disclaimer: I’m simplifying a little bit. I think the penalty is equal to about 2/3rd of 100k due to credits (cant remember exactly), but the more employees you have over that 51st hiring the less impact the “credits” have). So a big knock on the original reform bill was that no one is going to hire that 51st employee, and that’s why it’s “only” the 2k penalty, it used to be a 8% payroll penalty tax so any employee making over 25k a year would cost more than the 2k penalty. So it used to be a worse penalty now its “better”. Also this applies only to full time employees which I think they currently define as people working 30+ hours.

So the congress came up with 2k because they thought it wouldn’t discourage smaller business enough to stop hiring at 50 employees, maybe slow them down or possible even entice them to offer healthcare insurance, but it shouldn’t stop them completely. But what about the big guys? They didn’t think about them and it’s MUCH better for them.

Henry Waxman was upset about write downs big (publicly traded) companies were announcing related to the retiree drug benefit subsidy so he asked for their internal documents relating to their analysis to these write downs. But he also asked for ALL documents relating to any health care analysis these big companies did. He got a lot more than he wanted, and cancelled the hearings to avoid embarrassment and more public backlash about healthcare overhaul. So here is the rest of the story:

http://rawstory.com/rs/2010/0506/att-verizon-considered-dropping-health-insurance-employees/

http://money.cnn.com/2010/05/05/news/companies/dropping_benefits.fortune/

The two speakers both think there’s very little chance healthcare reform gets repealed. However this is the biggest threat to it. This is a very big deal. There is no way the reform plan can work if big companies do not provide coverage to their employees. Even if some big companies drop coverage it will be a very big deal. They said at some point reform will have to take place to change the current 2k penalty so that different sized companies are affected differently. But said if Republicans take control reform will likely not take place and basically it comes down to what big company wants to pull the trigger first.

Also what was kind of sad to hear is they thoroughly expect most small companies to drop health care coverage to their employees…. I work for a small company.

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firstdown

They don't want the plan to work so then they can make the argument for a national plan. This was pretty basic stuff and these larger companies can now push this expense over on to the government. Sure they will get hit with higher taxes but they are betting the tax will be less then what providing health care cost them now.