Democratic lawmakers on Wednesday canceled a hearing called to hear concerns by AT&T and other corporations about new employer costs in the health care overhaul, saying the companies now believe the overhaul could ease their costs if implemented properly.
AT&T, Caterpillar, AK Steel and other companies said last month they would be forced to take billions of dollars in writedowns because of changes in how health care subsidies will be taxed.
But Energy and Commerce Committee Chairman Henry Waxman, D-Calif., issued a statement late Wednesday, saying he canceled a hearing scheduled for next Wednesday at the request of several companies that want more time to see how the law is implemented.
"Companies like AT&T, Verizon, and a range of stakeholder associations are hopeful that the benefits of the new law will outweigh the costs," Waxman stated.
Beginning with construction equipment maker Caterpillar, a succession of companies said the health care plan signed into law last month would require them to pay new taxes on a subsidy for retiree drug coverage. Some companies said they could decide to scale back benefits to absorb the costs.
Under the Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits — including the subsidies — from their taxable income.
The new law allows companies to only deduct the 72 percent they spend.
However, company executives have apparently changed their minds about the extent of that cost.
Waxman's statement quotes an AT&T vice president saying that if other parts of law aimed at lowering health care costs are successful, "self-insured companies like AT&T would likely benefit from such reduced costs."
According to a Waxman memo distributed to committee members, the companies were required to estimate the impact of the new health care law to comply with financial regulations. But the charges they cited will be spread out over decades, making it "only a fraction of the amount of the noncash charges reported."
Waxman said he would "schedule hearings on the impact of the law as appropriate," but set no timeframe.
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