Chief Political Correspondent
March 28, 2010
Rep. Henry Waxman, chairman of the House Committee on Energy and Commerce, has summoned some of the nation's top executives to Capitol Hill to defend their assessment that the new national health care reform law will cost their companies hundreds of millions of dollars in health insurance expenses. Waxman is also demanding that the executives give lawmakers internal company documents related to health care finances -- a move one committee Republicans describes as "an attempt to intimidate and silence opponents of the Democrats' flawed health care reform legislation."On Thursday and Friday, the companies -- so far, they include AT&T, Verizon, Caterpillar, Deere, Valero Energy, AK Steel and 3M -- said a tax provision in the new health care law will make it far more expensive to provide prescription drug coverage to their retired employees. Now, both retirees and current employees of those companies are wondering whether the new law could mean reduced or canceled benefits for them in the future.
The news is an embarrassment for Democrats. As President Obama and congressional leaders tout the purported benefits of the new health care law, some of the nation's biggest companies are saying it will mean higher costs and fewer benefits -- not exactly what Democrats want to hear in the days after their historic victory.
So Waxman has ordered the executives to explain themselves at an April 21 hearing before the Energy and Commerce Committee's investigative subcommittee. That subcommittee just happens to be chaired by Rep. Bart Stupak, the Michigan Democrat who held out his vote on health care reform until a few hours before final passage on March 21, giving the bill's opponents the unfounded hope that he might vote against it.
Waxman's demands came Friday in letters to several executives. "After the president signed the health care reform bill into law, your company announced that provisions in the law could adversely affect your ability to provide health insurance," Waxman wrote to Randall Stephenson, chairman and CEO of AT&T. A few hours before Waxman sent his letter, AT&T announced it will take a $1 billion charge against earnings because of the tax provision in the new health bill. AT&T also said it will be "evaluating prospective changes" to its health care benefits for all workers.
Waxman's letter suggests he does not accept the company's decision. "The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern," Waxman wrote to Stephenson, in addition to letters to Verizon CEO Ivan Seidenberg, Caterpillar CEO James Owens, and Deere & Company CEO Samuel Allen. The companies' decisions, Waxman wrote, "appear to conflict with independent analyses."
Waxman's demands for documents are far-reaching. "To assist the Committee with its preparation for the hearing," he wrote to Stephenson, "we request that you provide the following documents from January 1, 2009, through the present:
(1) any analyses related to the projected impact of health care reform on AT&T; and (2) any documents, including e-mail messages, sent to or prepared or reviewed by senior company officials related to the projected impact of health care reform on AT&T. We also request an explanation of the accounting methods used by AT&T since 2003 to estimate the financial impact on your company of the 28 percent subsidy for retiree drug coverage and its deductibility or nondeductibility, including the accounting methods used in preparing the cost impact statement released by AT&T this week.
Waxman's request could prove particularly troubling for the companies. The executives will undoubtedly view such documents as confidential, but if they fail to give Waxman everything he wants, they run the risk of subpoenas and threats from the chairman. And all as punishment for making a business decision in light of a new tax situation.The particular problem for the companies involves the prescription drug coverage they offer retired workers. In 2003, when President Bush and the Republican Congress passed the Medicare prescription drug entitlement, they offered a tax break to companies that continued to provide drug coverage for their retirees, rather than forcing them into the Medicare system. The new national health care bill ends that tax break, making it more expensive for the companies to continue offering the coverage. Ultimately, some analysts believe, the companies will stop covering the retirees, pushing them into the government system.
Waxman's action took Republicans on the Energy and Commerce Committee by surprise. Contacted Saturday, Texas Rep. Michael Burgess, who is the ranking Republican on the investigations subcommittee, said, "The timing of the letters and the hearing and the scope of information requested looks an awful lot like an attempt to intimidate and silence opponents of the Democrats' flawed health care reform legislation, which is unfortunately the law of the land."
Burgess added, "I heard from several businesses back home in North Texas that the Democrats' health reform would be bad for business, so I am not surprised that companies are beginning to announce that it will cost them…I look forward to hearing more from the officials at these companies about the adverse effects of the Democrats' health reform will have on their business."
In coming days, Republicans are likely to emphasize the costs, both financial and human, of the new law. In an interview Thursday, Rep. Tom Price, head of the House Republican Study Committee, said his party's first priority will be to "identify as often as possible the detrimental and remarkably consequential effects of this bill on communities." Price specifically pointed to the Caterpillar and Deere announcements as examples of what GOP lawmakers will cite as the adverse effects of the law. (At the time Price spoke, AT&T had not yet announced its decision.)
Given that, it's no wonder Democrats are planning an aggressive campaign against the businesses involved. Elections are coming up, and Democratic leaders are in no mood to hear discouraging words about what they regard as their signature achievement.