AT&T to Book $1 Billion Cost on Health-Care Reform

[maryf]

The fallout begins...profits getting hit will equal workers/retirees paying for it...

http://www.businessweek.com/news/2010-03-26/at-t-to-take-1-billion-charge-on-health-care-reform-update1-.html


"AT&T to Book $1 Billion Cost on Health-Care Reform (Update3)

By Amy Thomson and Ian King

March 26 (Bloomberg) -- AT&T Inc. will book $1 billion in first-quarter costs related to the health-care law signed this week by President Barack Obama, the most of any U.S. company so far.

A change in the tax treatment of Medicare subsidies triggered the non-cash expense, and the company will consider changes to the benefits it offers current and retired workers, Dallas-based AT&T said today in a regulatory filing.

AT&T, the biggest U.S. phone company, joins Caterpillar Inc., AK Steel Holding Corp. and 3M Co. in recording non-cash expenses against earnings as a result of the law. Health-care costs may shave as much as $14 billion from U.S. corporate profits, according to an estimate by benefits consulting firm Towers Watson. AT&T employed about 281,000 people as of the end of January.

<snip>

AT&T rose 9 cents to $26.24 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 6.4 percent this year.

Union Contracts

AT&T employees represented by the Communications Workers of America union have health benefits locked in via contracts that don’t expire until 2012 and 2013, Candice Johnson, a spokeswoman for the union, said in an interview. About 58 percent of the carrier’s workforce is represented by the union, AT&T said in a filing."

more at link...

[ThomWV]

1. John Deere Tractor, on its website, attributes $150 Million after tax cost to HCR

I read it last night.

[maryf]

3. Its going to snowball

even worse than anticipated, I think...

[ThomWV]

6. Well, it'll be a small snowball - it was $150M cost increase against $1.5B quarterly revenue

That is how the Press Release blurb read, a hundred fifty million cost increase against a one point five billion dollar quarterly revenue. So the increase is basically insignificant.

[maryf]

14. Any change is significant to them... and I'm sure 10% is enough

to get them to make cuts, 10% is not insignificant to the stock holders, hhhmmm, but they are buying stocks on the word that the health coverage will be changed....

[Statistical]

18. 10% is barely significant?

If you income declined 10% would you say it is insignificant?

Now I am not trying for them. For the system to be fair more people & companies will need to pay more however to say a 10% charge is insignificant is silly.

[galileoreloaded]

22. Unless that is your profit, and by stripping it out the decision is made to cease selling products.

There IS a point where it isn't worth it to operate anymore.

[maryf]

26. With a not for profit health care system

costs wouldn't be cutting into the profit base of other companies as badly...

[fasttense]

8. It's only a tax loop hole they can longer take.

They were, and still are, getting a subsidy from our tax dollars and then turning around and deducting that subsidy (our tax dollars) from their taxes. Just a minor reduction in welfare for corporations, Nothing More.

Don't worry, we poor will still be subsidizing John Deer's profits.

[maryf]

20. we poor will still be subsidizing John Deer's profits.

and everybody else's profits

[donco6]

2. They closed a loophole on a tax benefit they were receiving.

They're posting an accrual against future costs.


"Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits — including the subsidies — from their taxable income.

The new law allows companies to only deduct the 72 percent they spent."

So the new law got rid of a loophole they've been taking advantage of. Boo fucking hoo.

[maryf]

4. No sympathy for the corporations...

and their methods, just concern for the workers and retirees here...they'll pay so profit losses become gains...

[MajorChode]

11. Exactly. I wish I could get a subsidy from the gov and then use that subsidy as a tax writeoff

It was criminal they were allowed to do that anyway. They still get the subsidies, they are just not allowed to count the subsidy as a deductible expense on their taxes which they never should have been able to do in the first place.

[donco6]

17. But in the meantime, they get to whine about it.

And blame any profit-garnering layoffs to HCR.

[Statistical]

19. So now there is less incentive for companies to cover drug cost of retirees...

I wonder HOW they will figure out how to cut costs?

[fasttense]

5. I've seen this posted five times on DU already.

Is it really that big of a story???

First the headline is very misleading. But what do you expect from Business Week?

But I'm cheering that AT&T may actually have to pay their taxes. Looks like the free money At&T got in a subsidy directly out of our tax dollars, will no longer count as a tax deduction for them.

Yup, you got it right. AT&T was getting a subsidy to pay their bills then turned around and deducted that, free money, err, subsidy, from their taxes. With the new law, they can't get a tax write for the free tax payer money they were taking, poor babies. Gee I wish I could get welfare like that.

But really can we stop posting this already??

[maryf]

9. Apologies to all

I've been swamped lately and haven't been on line for a week. I tried to search this article to see if it had been posted here, obviously didn't use the right key words, anyway, what I see is the profit loss to corporations being foisted onto the workers' and others' backs via cuts to their health coverage...This will be worse than the pre bill status quo, as the benefits of this new bill won't be seen until 2014...

[maryf]

10. PS: if you've seen it, skip it, others may have missed it. nt

[JustAnotherGen]

7. I didn't see this note . . .

New York-based Verizon, the second-largest U.S. phone company, told employees in a note after the law was signed that the tax will make the subsidy less valuable to employers like Verizon and so “may have significant implications for both retirees and employers.”

All we got was a copy of Integrity Times last week (a newsletter that gives a warning to basically do right by our customers, don't cheat people, don't be sneaky to get sales, etc. etc.). I'll look tomorrow at my email - but I did NOT see that message at all last week.

Generally politics is left out of business - eh? Maybe online landline employees have received it? But that still doesn't make sense, because we all get the same benes regardless of line of business. Hmmmm . . ..

[Motown_Johnny]

12. all these numbers are slanted. They need to factor in increased productivity due to

fewer sick days being taken as well as personal days taken to care for sick loved ones.


Don't believe the mega corporations on this.

[maryf]

13. I notice no comments regarding the fact

that their stocks have risen, definitely a sign to me that the money mongers are happy that AT&T says it will consider changes...

Hope for change is making many happy, the profit is their bottom line...

[anigbrowl]

29. It's not really that surprising

Investors don't like uncertainty, any more than anyone else. Of course paying out the money to cover a bill is expensive, but once you know what the amount you owe is then it makes it much easier to plan your future budget. AT&T isn't complaining about this, they're simply setting aside the cash they'll need to meet their long-term obligations (which wasn't possible until the bill passed and they could calculate the likely costs involved) and notifying SEC regulators of the fact, which they are obliged to do by law so that their shareholders know what management is doing.

You mentioned elsewhere that 'what I see is the profit loss to corporations being foisted onto the workers' and others' backs', but you seem indifferent to the fact that this charge means AT&T is covering its obligations to their employees, and that this $1 billion that won't be going into the pockets of shareholders in the form of a dividend. I'm not saying they deserve a medal for that, they're just doing what they're supposed to do under the law.

On the other hand, I'm at a loss as to why you think that makes them bad people. I mean, do you think they should not bother trying to make a profit and just run at a loss until they go out of business and everyone loses their jobs?

[maryf]

30. Did I say they were bad people?

? I queried why would more buy their stock? and what about the other corporations? I don't say they are "bad" here, my point is that this healthcare bill will be costing everyone more than was implied...especially those who can least afford it...

editted for clarity

[anigbrowl]

33. No you didn't, perhaps I misread your tone then

I just got the impression that you were unhappy with them and anyone who supported them financially ('money mongers').

It's really not that uncommon for the value of a company's stock to rise after they've announced a large express that puts a dent in their profits, because it makes it easier to assess the company's economic future and decide if it's a good investment or not.

[maryf]

37. Doesn't seem like people

seem to think "investing" in their worker's health care is a good idea. Anyway, my main belief is that profit shouldn't be in health care. AT&T and others are selling products that aren't based on human need. Insurance companies are, and it is effecting all these other corporations. Maybe we should be going to the CEO's of big corporations with single payer plans, when they see the savings on cost to them, they might sign on...many conservative cities have....

[JDPriestly]

15. AT&T's loss is the government's gain.

As I understand this, AT&T was getting tax relief for purchasing health care insurance for retired people who otherwise would have received Medicare.

Millions of retirees around the country simply get Medicare, not some special corporate plan.

"AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees, who would otherwise be on a Medicare Part D plan. Under the new bill, AT&T will no longer be able to deduct that subsidy."

http://www.businessweek.com/news/2010-03-26/at-t-to-take-1-billion-charge-on-health-care-reform-update1-.html

Medicare Part D is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries in the United States. It was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and went into effect on January 1, 2006.<1>

http://en.wikipedia.org/wiki/Medicare_Part_D

The Wellpoint Reform Bill that Obama just signed changes the funding for Medicare Part D. It eliminates the donut hole for many of us.

I am wondering whether the donut hole that applied to the rest of us is being filled by taxing the companies that already fill the donut hole for the duplicate coverage that the new bill gives. That's a possibility.

Retirees from these corporations would no longer have a donut hole to fill with a corporate-sponsored program. Seems to me that some of the retirees' unions should be willing to agree to tweaking their agreements with the corporations so that the retirees get the same coverage everyone else gets. I may be very wrong on this since the article does not provide all the facts on the issue. Business Week did lousy reporting on this, I must say. Coverage under Medicare D was improved for everyone.

And yes, change results in change. Our health care and tax system will have to change to respond to the new, Wellpoint bill. That is to be expected. We needed the change. We still need more.

I'm hoping that, now that Congress has passed the Wellpoint Health Care Insurance Reform Bill, it will consider passing Alan Grayson's People's Bill aka the Medicare for All Bill.

Wellpoint has had its say. (Google Liz Fowler and check her resume on L'il Sis.) It's time for us to have ours.

[maryf]

25. Now everybody will be helping Big Pharma even more...

"AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees, who would otherwise be on a Medicare Part D plan. Under the new bill, AT&T will no longer be able to deduct that subsidy."
this comes from the article in the OP, but we have to edit how much to put in, as you know...such a shame so many don't read the links provided...thanks for adding this...

[cherokeeprogressive]

36. Regarding your first paragraph...

My wife retired from AT&T after working for the company 37 years. She was 55. No Medicare for her. There are lots of people like her. Collective bargaining got her the benefits she has now, and will probably lose as a consequence of this.

[Naturalist111]

16. Looks like they will have to sell out to Verizon!

[maryf]

21. about Verizon from the article...

" Michael Coe, a spokesman for the carrier, declined to comment. Peter Thonis, a spokesman for Verizon Communications Inc., which also employs more than 200,000 people, declined to comment.

New York-based Verizon, the second-largest U.S. phone company, told employees in a note after the law was signed that the tax will make the subsidy less valuable to employers like Verizon and so “may have significant implications for both retirees and employers.”"

[tritsofme]

23. Lots of retirees who get prescription drug coverage through their job will be dumped into Part D.

I don't know enough about the programs to conclude if this is a good or bad thing.

[maryf]

24. Part D is for profit

no negotiations for costs, no coverage after so much spent, you can try to apply for more after spending huge amounts...Big Pharma loves it...(the only really bad part of Medicare... hint, hint follow the money)

[kentuck]

27. Did these corporations get another 28% deduction from this program also?

And don't they deduct 100% of all healthcare costs?? Pretty much a gravy train for employers, isn't it?

[maryf]

28. Haves win big time...

have nots, not so well...

[Atman]

31. It's bullshit -- a loophole is being closed which allowe double dipping

They received .28 on the dollar from the govt. for their health care costs, but were allowed to deduct 100%...which
means you and I pay for instead. FUCK THEM. They're gravy train stopped, now they're whining.

[maryf]

32. And who will pay?

not AT&T, or the other corporations mentioned in the article (hope all read the whole thing) the people/workers will be paying...

[Atman]

34. False argument...we are ALL already paying.

The govt PAYS AT&T 28 cents...then they WRITE OFF $1. Who is paying now? YOU. ME. Close the loophole up front, save on the back-end. Don't believe for a minute that AT&T is only employing people because of a 72 cent/person accounting gimmick. If they need x number of people to provide their service, they will re-work their accounting gimmicks...but they'll still need the manpower.

[tritsofme]

35. The point being that they may discontinue their prescription drug benefit

to retirees, shifting them into Part D.

I don't know enough about the plans to know which one provides the best benefits, or if they are pretty much comparable.

[maryf]

38. If we had single payer Medicare for all they would be saving a lot...

Companies would love it, and folks could change jobs without fear of losing their coverage, hhmmm, actually maybe the big corporations wouldn't like that. BTW how can it be a false argument when we both agree??