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The impact of the tax change generated speculation about whether employers would continue to fund retiree drug plans or overall health benefits.
AT&T said it would take a $1 billion charge against earnings because accounting rules require public corporations to announce such financial impacts immediately. Verizon put the cost at $970 million, and Caterpillar announced a $90 million charge. The total hit was estimated to be $14 billion. House Energy & Commerce Committee Chairman Henry Waxman (D-Calif.) called for an investigation into these "excessive claims," but backed off a few weeks later when it turned out that the numbers were legitimate.
The impact of the tax change generated speculation about whether employers would continue to fund retiree drug plans or overall health benefits. The affected companies acknowledge that the actual financial hit this year is not that much and that other aspects of reform may improve their healthcare programs.
Companies may get some help in holding down retiree healthcare costs from a new $5 billion program offering subsidies to companies that provide coverage for some 2 million retired workers under age 64. The reinsurance program, which can cover 80% of the cost of expensive medical claims ($15,000 to $90,000), aims to encourage employers to continue retiree benefits, at least through 2014 when exchanges begin.
NET LOSS OF ENROLLEES
Ironically, exchanges and other reforms that make coverage more available to workers and retirees could make it easier for companies to drop health benefits. Although employer-sponsored health insurance is expected to remain the most prominent source of coverage for Americans, the chief actuary of the Centers for Medicare and Medicare Services (CMS) Richard Foster calculates that by 2019 multiple PPACA provisions will reduce the total number of people obtaining benefits through the workplace by 1 million.
On the plus side, Foster predicts that 13 million workers and their family members will gain employer-based benefits from a range of provisions, including coverage for dependents up to age 26.
At the same time, smaller companies may terminate benefits if they calculate that new tax credits-or the $2,000 per-worker penalty on employers that fail to provide insurance-amount to less than the prevailing cost of health insurance. Foster calculates that these trends will reduce those with employer-sponsored coverage by 14 million.
Employer decisions on health benefits ultimately will be shaped by the cost and scope of plans. Exchanges and subsidies may make it easier for workers to obtain affordable coverage outside the job.
Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.