March 27 (Bloomberg) -- Representative Henry Waxman called the chief executive officers of AT&T Inc., Verizon Communications Inc., Caterpillar Inc. and Deere & Co. to provide evidence to support costs the companies plan to book related to the new health-care law.
Waxman of California, chairman of the House Energy and Commerce Committee, and subcommittee Chairman Bart Stupak of Michigan released letters they wrote to the executives, saying their plans to record expenses against earnings as a result of the law contradict other estimates. The lawmakers requested the executives appear at hearing Stupak plans on April 21.
“The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern,” Waxman and Stupak, both Democrats, wrote in the letters yesterday. “They also appear to conflict with independent analyses.”
AT&T, the biggest U.S. phone company, is among employers that have announced plans to book costs related to the health- care law signed this week by President Barack Obama. The 10- year, $940-billion legislation is intended to cover 32 million uninsured Americans and provide benefits such as restricting premiums and ending the practice of denying coverage for pre- existing conditions.
Dallas-based AT&T said in a regulatory filing yesterday it would record $1 billion of costs, the most of any U.S. company so far.
AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees. Under the new bill, AT&T will no longer be able to deduct that subsidy.
Tax Burden
“As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health-care benefits offered by the company,” the carrier said in the filing.
New York-based Verizon, the second-largest U.S. phone company, told employees in a note shortly after the law was signed that the tax will make a drug subsidy less valuable to employers like Verizon and so “may have significant implications for both retirees and employers.”
Moline, Illinois-based Deere, the world’s largest maker of farm machinery, said on March 25 that the new health-care law would increase its expenses by $150 million this fiscal year.
Peoria, Illinois-based Caterpillar, the world’s largest maker of bulldozers and excavators, expects to record a charge of about $100 million in the first quarter of 2010, reflecting new tax liabilities on retiree drug benefits.
No Charge at GE
General Electric Co., the world’s biggest maker of jet engines, power-plant turbines and locomotives, said today it doesn’t anticipate taking a charge tied to the health-care law.
GE, of Fairfield, Connecticut, doesn’t see any “material effect” from the law, spokeswoman Anne Eisele said today.
Waxman and Stupak said the Congressional Budget Office had reported that average premium costs per person would decrease as much as 3 percent by 2016 for companies insuring more than 50 employees. They also cited what they said was a November estimate by the Business Roundtable, an association of chief executive officers, of reduced health-insurance cost trends.
The lawmakers asked the companies to provide documents to the committee supporting their planned charges by April 9.
--With assistance from Amy Thomson and Will Daley in New York, Rachel Layne and Edmond Lococo in Boston and Ian King in San Francisco. Editors: Ann Hughey, Mark Rohner
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