Caterpillar's Bottom Line To Take Big Hit Under Health Care Bill

Love it or hate it--and according to the polls it's mostly hate it--the health care bill will be law soon. But what's going to be the bottom line impact for companies? For Caterpillar, it's a lot more than you think.

It was maybe the strangest, and yet most horrendous, bit of news that I heard about the health care bill that passed mere hours ago--like maybe twelve or so of them--is that it was going to cost businesses like no tomorrow.

Anyone out there who owns stock in Caterpillar may want to consider short sale, because according to Cat officials, the health care bill will cost them fully one hundred million dollars in the first year alone, a cost increase of fully twenty percent.

Now, some of you might be looking at that and saying, hey, what's a hundred million bucks to Caterpillar's bottom line? To a company that makes nearly eight billion dollars a quarter?  Not so much. It'd be the equivalent of you making eight hundred bucks a week and then shelling out an extra ten bucks for gas. But for a company whose margins are as thin as Cat's are (they made eight billion in Q4 2009, but spent fully 7.77 billion in operating expenses) it could be a very bad set of circumstances indeed.

And with this extra fixed expense quite possibly on their balance sheet for some time to come, it may not bode well for Cat...

...or anyone else for that matter.

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  • JRodgers

    March 23, 2010

    It sure as hell doesn't. The stock market should have been down 300 points today after the American public got to see the way that the Dems rammed this down everybody throat. I still feel a real pullback is coming.

  • kkon

    March 23, 2010

    Maybe the market realizes the bill may actually be good and help prevent a long term collapse.

  • JRodgers

    March 23, 2010

    How does it prevent a long term collapse when every small, medium and large business and every investor now has a significant tax placed on them to pay for something that will never accrue to them (as a matter of fact, won't accrue to anyone at all for 4 years)?

  • SteveAnderson

    March 24, 2010

    JRodgers--Indeed, you had the same outlook on this as I did. Serious problems with that health care bill that we're all going to have to try and work around now lest total collapse follow. I do wonder, however, if more companies won't switch to ICs instead of "employees" to get them out of this bill.

  • Arnold

    March 24, 2010

    We already pay for healthcare for most of the uninsured. When they are sick, they go to the hospital which costs 10x more than a scheduled visit. What problems are there with the bill? That you have to pay?

    Either everyone is covered or noone should be covered in my opinion. If you don't like healthcare, get rid of Medicaid and Medicare. Why should we have to pay for that? And when you get sick and are denied coverage, don't come crying to me.

  • Kristen

    March 24, 2010

    Funny thing, Caterpillar's stock is topping the market right now. It added 3.5% to $62.05! Makes you wonder...

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