I predict that one of the most common phrases in the American vocabulary over the next few years will be, “I didn’t know the health care bill would do that.” And Democrats will be saying it most.
Even as the president traveled to Iowa City to let everyone know Armageddon hadn’t happened, several large companies declared they would start health-reform-related write downs—AT&T for $1 billion.
Here’s the back-story. In 2003, Congress passed the Medicare prescription drug benefit. There was a concern among legislators that including that benefit might encourage large employers that provided retiree coverage to phase it out.
Republicans, who controlled Congress, decided to provide those companies with a subsidy, spending about $665 per retiree to subsidize the employer’s plan, but saving $1,209 if the retiree had been dumped into Medicare. Most private sector employers continued to offer their coverage, and the government spent less than if the retiree had been dumped into Medicare.
Enter Obamacare. Democrats needed to find some “savings” to hide the cost of their health care plan, so they ended that $5.4 billion subsidy. So those companies have to immediately start writing down the money they won’t be seeing in the future. Most will likely phase out their retiree plans.
But how can the numbers still work? Won’t those retirees moving from an employer plan to Medicare cost the government more?
Yes, but in Obamaccounting, you simply assert you’re going to cut Medicare by $523 billion over 10 years and—ta da—everything balances.
As companies lined up the past few days to announce their write downs, House Energy and Commerce Committee Chairman Henry Waxman (D-CA) expressed surprise. He had no idea that companies would start doing that. He should have. Companies are required to publicly announce such material changes in their position as quickly as they can be calculated, under penalty of prison time.
We knew that Speaker Nancy Pelosi (D-CA) was telling the truth when she said we needed to pass the health care bill so the country could find out what’s in it. We just didn’t know she was referring to her own Energy and Commerce chair.