“If you like your health plan, you can keep it." Wait what?

As is documented in the Healthcare Hemorrhage post below, scores of publicly traded companies are being forced to write off billions of dollars against future earnings, eroding shareholder value and costing the equivalent of tens of thousands of jobs. 

But there is perhaps a more onerous result of the impact of Obamacare:  These charges are because companies are losing a tax break for funding retiree's prescription drug coverage.  When Congress passed prescription drug coverage for seniors in 2003, companies that chose to pay for coverage for their retirees were given a tax break.  The favorable tax coverage was an incentive for the companies to keep millions of older Americans out of the less efficient, more costly (to the taxpayer) Medicare coverage.  Obamacare wiped out the tax break.

The Generally Accepted Accounting Principles and SEC regulations forced the companies listed below to announce the effects of the change as soon as the information was known to management.  But what neither these companies nor the Democrats in Congress are likely to tell you is that without this incentive, companies no longer have a reason to fund their retiree's drug coverage.  As a result, millions of retired seniors are going to see their drug coverage plans changed drastically, or ended altogether.  One of three things is going to happen:

1.  The company eats the change in the tax code and continues to fund the plan for existing retirees, but accepts no new enrollments.  In this economic environment?

2.  The company continues to fund the plan for existing and future enrollees, but passes the cost of the tax change on to them in the form of higher deductibles and co-payments.

3.  The company ends the plan altogether and pushes current and future retirees into the Medicare Part D program.

Some combination of the latter two is the most likely, with potentially millions of seniors facing significant cost increases.  They'll either pay for the cost of the tax code change (on the order of about 25 to 30%), or they'll pay the cost of the so-called "donut hole," which is an out-of-pocket cost of prescription drugs under Medicare.

While ObamaCare puports to close the "donut hole," the first year benefit is only $250 and the closure won't be complete until 2014, at the very earliest.

This only serves to highlight and illustrate the lie told by President Obama--repeatedly--throughout the summer and fall of 2009.  He said, over and over again:  "If you like your health plan, you can keep it."  Unless you retired from a company like AT&T, Caterpillar or Prudential, and you enrolled in their retiree prescription drug plans after January, 2004.  

Les Phillip for Congress

Allow me to introduce you to a man you may not have heard of, yet.  His name is Les Phillip, and he's running for US Congress in Alabama's 5th Congressional District.

Mr. Phillip is a veteran of the US Navy, where he earned his Aviator's Wings and graduated from the US Naval Academy in Annapolis, MD.  He is married to his college sweetheart and is the father of three daughters.

Since leaving the US Navy in 1993, Mr. Phillip has enjoyed a successful business career, serving in project management, operations and sales for several successful Alabama companies.  His "outsider" credentials are impeccable--he has never held elected public office.

Phillip's position on the issues facing this country are straight down the line Reagan conservatism.  His stances on taxation, national defense, energy policy, the environment, healthcare and education make it clear that conservatives will have no stronger ally in the House of Representatives.

His opponents in the in a competitive GOP primary field are the incumbent, former Democrat Parker Griffith;   and Mo Brooks, a long time political insider and state GOP stalwart.  Griffith "talks the talk" of conservatism, crediting the House's vote on Obamacare as the reason for his switch. Despite the fact that he caucused with the Democrats and voted for Pelosi as Speaker of the House, Griffith appears to be the RNC's favorite.  Brooks has a long and impressive resume of public service, but he's never held a private sector job.  Although he espouses conservative philosophies, career politicians don't square with Americans' hunger for fresh ideas and new faces.

Phillip's military service, combined with his experience out here in the real world of business, make him the stronger candidate.  Phillip knows what it means to make a payroll in the private sector, and he knows what the men and women of the Armed Forces need to keep this country safe.  In fact, listening to Mr. Phillip speak, one has a hard time realizing that the Navy vet is now a civilian.  There is no double-speak, here.  He is what he is, and he says what he means.

You should get to know Mr. Phillip. Visit his site and browse his positions on the issues.  Make a donation if you are so inclined. If you live in AL-05, make sure to vote in the June primary and give Mr. Phillip the courtesy of your support.

The Healthcare Hemorrhage

Updated 04/05/10, adding newly announced firms.

ObamaCare was supposed to reduce costs, wasn't it?  That was the story we got from the Democrats' dog and pony show leading up to its passage.  But a week after the bill was signed into law, a number of publicly traded companies began issuing statements regarding the effect on earnings.  By my count, a total of 15 19 companies have made statements regarding ObamaCare's impact on the bottom line.  These figures are in millions of dollars:

Company	Charge
Allegheny Technologies	$5
Carpenter Technology	$6
Goodrich	$10
Honeywell	$13
Xcel Energy	$17
Valero	$20
Illinois Tool	$22
Eaton	$25
AK Steel	$31
Ingersoll Rand	$41
Brush Materials	$85
3M	$90
Lockheed Martin	$95
Caterpillar	$100
Prudential	$100
Boeing	$150
Deere	$150
Verizon	$970
AT&T	$1,000
To Date:	$2,930

So what, you say?  Well, that's $2.7  $2.9 billion in in lost shareholder wealth.  If you're like me and have a modest 401(k) account or managed IRA somewhere, chances are good that a lot of these companies are in your portfolio.  ObamaCare isn't just costing American business money, it's already costing you money, and it hasn't even been the law of the land for a fortnight.

Look at it another way.  With a median household income of about $50,000, that $2.7  $2.9 billion represents approximately 54,000 58,600 jobs.  On the date this was posted, the Bureau of Labor Statistics reported total non-farm payrolls rose by about 162,000 in March, 2010.  Of the total, there were only about 48,000 permanent, full time jobs created by the private sector (see Table B-1).  In only one week's time, Obamacare wiped out the equivalent of 10,000 more jobs than was created by Obama's economy in the entire month of March.

The Extra Point:  Obama's $870 billion stimulus package is a ripe, one year old behemoth.  Where are the jobs?  Hemorrhaging through the open wound of Obamacare.

If you know of a publicly traded company that announced a charge to earnings due to Obamacare, and that company is not listed above, leave me a comment or send me a tweet at @GulfCoastTider.