Government Takeover of Health Care

Obama Signs Final Health Care Changes, Defends Overhaul

March 30, 2010

Reuters – President Barack Obama made another push to sell his healthcare overhaul to a skeptical public on Tuesday, calling it a victory over special interests that will improve the lives of middle-class Americans and defending the "courage" of legislators who backed it.

"This day affirms our ability to overcome the challenges of our politics and meet the challenges of our time," Obama told a college audience outside Washington, as he signed into law final changes to the sweeping plan approved by lawmakers last week, along with reforms in college student loan programs [see story below].

The signing capped a year-long struggle between Democrats and Republicans that has set the stage for a bitter campaign for control of Congress in November. Republicans have vowed to make the healthcare bill the centerpiece of the election fight as they seek to repeal it.

Obama defended legislators who voted for the bill, the most sweeping shift in U.S. social policy in decades, and took aim at what he said were misleading attacks.

"Courage is an essential ingredient in any landmark legislation, particularly when the attacks are as fierce and unrelenting and inaccurate as they have been over the past year. I just want to commend members of Congress who had the courage to do what's right," he said.

But opinion polls show Obama and his Democrats will have to work hard to promote the 10-year, $940 billion overhaul.

Nearly two-thirds of Americans say the healthcare overhaul costs too much and expands the government's role too far, according to a USA Today/Gallup survey published on Tuesday.

Sixty-five percent of Americans believe the reforms cost too much, and 64 percent say they bring too much government involvement into a private industry, the poll said.

In an interview that aired on Tuesday, Obama acknowledged that adjustments will be needed in the law to reduce costs.

"I think it is a critical first step in making a healthcare system that works for all Americans," Obama said in an interview on NBC's "Today" show. "It is not going to be the only thing. We are still going to have adjustments that have to be made to further reduce costs."

U.S. companies have started to tally up the financial hit they say they will take because of the law.

The government still pays subsidies to large companies to help pay for prescription drug benefits for their large ranks of retirees, but the new law does not allow the corporations to also deduct the amount of the subsidies from their taxable income. Corporate America calls the change a tax increase, but the White House says it merely closes a tax loophole (see next story).

Factbox: Details of Final Healthcare Bill

Health Overhaul to Hit Corporate Profits

March 30, 2010

Reuters - U.S. companies have started to tally up the financial hit they say they will take as a result of the U.S. healthcare overhaul signed into law last week by President Barack Obama.

The government continues to pay subsidies to large companies, including AT&T Inc, Caterpillar Inc and Deere & Co, to help pay for prescription drug benefits for their large ranks of retirees.

However, the revamped law no longer allows companies to deduct the amount of the subsidies from their taxable income. Corporate America complains that the change amounts to a tax hike, while the White House says it essentially closes a tax loophole.

Not all big companies are warning of trouble. General Electric Co, for example, says it does not expect a "significant material impact" on its first-quarter results.

But a number of large U.S. employers have started detailing the expected hit to their bottom line. The latest warnings came from Prudential Financial Inc, which said on Monday that it would take a $100 million charge in the first quarter, and Allegheny Technologies Inc, which expects a $5 million charge.

The tally so far:

• AT&T said it would record a $1 billion noncash charge for the first quarter and evaluate prospective changes to the healthcare benefits it offers to both active and retired workers, according to a filing with the U.S. Securities and Exchange Commission.


• In a regulatory filing, Caterpillar described the regulatory change as a tax hike. It said accounting standards require the world's largest maker of earth-moving equipment to book a $100 million after-tax charge to reflect the change during the first quarter.


• Deere, a maker of farm equipment, said it expects to record a $150 million charge, mostly in its current fiscal second quarter. The expense was not included in the company's earlier 2010 forecast, which called for net income of about $1.3 billion.


• No. 2 life insurer Prudential said it expects a $100 million charge during the first quarter.
  


• 3M Co, which makes products ranging from Post-It notes to optical films for flat-panel televisions, will record a one-time non-cash charge of up to $90 million, or 12 cents per share. It said its January forecast of 2010 earnings did not include the impact of the healthcare law.


• Diversified U.S. manufacturer Honeywell International Inc in January estimated that healthcare reform would trim its first-quarter earnings by 4 cents to 5 cents per share. A Honeywell spokesman said last week that the company had not updated the earlier cost estimate and would continue to review the legislation.


• AK Steel Holding Corp will record a non-cash charge of about $31 million in the first quarter due to a reduction in the value of its deferred tax asset as a result of a change to the tax treatment of Medicare Part D reimbursements.


• Valero Energy Corp said it expects to take a charge of $15 million to $20 million in the first quarter due to the new healthcare legislation, and said it expects further tax costs to be calculated later.


• Metals processor Allegheny looks for a first-quarter one-time, non-cash charge of about $5 million, or 5 cents per share, due to the new healthcare law.