| WHO:
| James A. Klein, president, American Benefits Council
Paul Dennett, senior vice president, health care reform
Kenneth Porter, senior vice president, international benefits & chief actuary
Paul Dennett, senior vice president, health care reform |
| WHAT:
| Media Briefing Conference Call — On Monday, March 29 at 1:30 p.m. Eastern Time, the American Benefits Council will host a media briefing to set the record straight with regard to the retiree drug subsidy tax provision included in the newly enacted health care law. Council staff will provide background and context for the original Medicare law, the health care bill provision and the recent reaction from the business community.
“For months, the American Benefits Council, along with several employers and labor unions, warned that the retiree drug subsidy tax in the health care legislation would impose an enormous hit on company financial statements as soon as the bill was signed into law,” Council President James A. Klein said today. “The recent announcements by major U.S. companies have captured Wall Street’s attention, while the Obama Administration fails to acknowledge their significance. Since the president has made clear that job creation is his top priority, we urge the Administration and Congress to remove this obstacle to economic recovery."
U.S. Commerce Secretary Gary Locke told CNBC yesterday that the actions of these companies are “premature and irresponsible” in advance of government regulations, but this statement is simply incorrect.
“Accounting rules require these companies to reflect the hit on their financial statements before they announce first-quarter earnings,” Klein said. “No regulations will or could be issued to change that. Only a complete reversal of the provision will negate these losses.”
Similarly, White House Press Secretary Robert Gibbs suggested that the health care law closes a “loophole” in the Medicare statute. In fact, this provision of the Medicare Modernization Act was carefully crafted on bipartisan basis to save the government money by making it possible for employers to continue sponsoring retiree drug coverage, rather than move retirees into the Medicare Part D program. Former Centers for Medicaid and Medicare Services Chief Tom Scully affirmed this point in a December 3 Wall Street Journal op-ed and in the Council’s December 10 Media Briefing.
“Over the next several days, many companies will be compelled to either take a hit on their earnings or decide to move retirees into the Medicare Part D program.” Klein said. “As our recent research report clearly shows, as more retirees are moved from employer plans to Medicare Part D, government outlays will increase, and the shift from employer retiree drug subsidy programs to Medicare Part D is likely to be significant. In the end, this so-called revenue raising provision may actually cost the government money.” A separate study, conducted by the Towers Watson consulting firm, reported that unless companies change their benefit plans, the aggregate accounting charge would be nearly $14 billion.
“We understand the Obama Administration doesn’t want a shadow cast over its historic legislative achievement, but the fact of the matter is, one-and-a-half to two million retirees will not be able to keep the coverage they like. We urge the White House and Congress to reverse this provision of the law at the first opportunity,” Klein concluded.
|
