Congress Cries Foul At Corporate Health Care Cost Projections.

The price AT&T will have to pay for health care, thanks to the new health care law, dwarfs most every other company's announced rates--so much so that the government itself wants to know where they're getting these numbers.

Remember when i was talking about Caterpillar's price for health care?  And how astonished we all were to discover they were going to have to shell out fully eighty five million dollars to get the job done?  Most of us regarded this as bad news, but it downright pales in comparison to the announced butcher's-bill over at AT&T, who will have to shell out a whopping one billion dollars to take care of its new obligations.

Part of that expense, reportedly, is the loss of a formerly available government subsidy for retired workers' insurance, as well as expanded health care expenses for the company's current massive workforce.  Basically, AT&T says it'll have to pay more for insurance for workers past and present, as well as future too, unless they manage to trim the expenses for present and future.

If you're thinking that this sounds way too high to be easily believed, you're not alone.  Representatives Henry Waxman and Bart Stupak are getting together to call various CEOs, among them the CEOs of both Caterpillar and AT&T, to Capitol Hill to "provide evidence to support costs the companies plan to book related to the new health-care law."  Seems that the announced estimates are contradicting several earlier estimates, and thus posing some cause for concern.

Of course, even if AT&T's estimates are ninety percent fantasy, a hundred million bucks is still nothing at which to sneer, to be fully grammatical about it. A full billion works out to be about one seventy-third of AT&T's total take in 2009, or roughly one and a third percent.  Thus a hundred million would be, roughly, .13 percent.  AT&T's got sufficient cash on hand to pay that bill almost four times over.

So should we be worried?  Or should we be wondering if some folks are looking to take a bite out of their tax bill that may not be strictly on the up and up?

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Comments

  • Charlie S

    March 30, 2010

    We should be thrilled they closed the tax loophole. The billion dollars was in tax deductions they were claiming for RECEIVING a subsidy that was already tax free! It was a big giveaway. If you want to reign in spending, that tax deduction is a good place to start... they still get the subsidy to provide the benefit, it is still tax free and they still get to deduct the costs they actually kick in themselves.

  • Scott

    March 30, 2010

    Corporations don't pay taxes, consumers pay taxes. Do you really believe any company is going to eat the cost and not pass it along to consumers?
    I would be curious to see what their profit margin is. Everyone is so quick to condemn corporate profits without understanding the difference between profit and profit margin. Politicians know the difference but it doesn't make as good a sound bite or talking point.

  • Charlie S

    March 30, 2010

    Not really Scott... prices are set at an equilibrium point where the company is most profitable.

    Take what you just said in reverse... lets say I donate a billion dollars to Apple computer. Do you think they will respond by dropping the price of the iPhone? A lot of people were upset with the bailouts, but did that result cheaper cars? Cheaper loans?

    So let me guess... you think to bring down prices we should have a fiscal policy where we give handouts to businesses and we should make those handouts BIGGER than they were?

    Finally, what are your thoughts on Citizens United? The USSC decision that allows corporations to pay whatever, whenever, however to influence elections. If we are also giving the same corporations tax payer money in heaps, don't you see a big giant problem with this?

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