Dems Confirm Claims of Reform Law’s Adverse Effect on Earnings
An investigation by House Democrats confirmed claims by several companies that a tax change in the new health reform law would have an adverse effect on their earnings, the New York Times reports. The change eliminates a tax deduction for companies that provide drug benefits to retirees.
After President Obama signed health reform legislation into law in March, a number of companies filed reports with the Securities and Exchange Commission that said the tax change would have an adverse effect on their financial results.
According to the U.S. Chamber of Commerce, at least 40 companies have announced that the tax change would result in charges against earnings, totaling $3.4 billion.
However, the White House suggested that the companies were exaggerating the effects of the change, and Commerce Secretary Gary Locke said the companies were being "premature and irresponsible" by claiming harm to earnings.
House Energy and Commerce Committee Chair Henry Waxman (D-Calif.) and Oversight and Investigations Subcommittee Chair Bart Stupak (D-Mich.) opened an investigation and asked four companies -- AT&T, Caterpillar, John Deere and Verizon -- to present documents proving the financial impact.
After analyzing the documents, the Democrats issued a memorandum saying, "The companies acted properly and in accordance with accounting standards in submitting filing to the SEC in March and April." They added, "[T]hese one-time charges were required by applicable accounting rules."
Waxman and Stupak then canceled a planned hearing during which they intended to question executives on their claims of reduced earnings (Pear, New York Times, 4/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.