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March 26, 2010

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The public will always approve of health care as long as they look at benefits and not costs. Blumenthal notes, "there are narrower benefits that will begin this year."

Meanwhile, "AT&T Inc. will take a $1 billion non-cash accounting charge in the first quarter because of the health care overhaul and may cut benefits it offers to current and retired workers" http://news.yahoo.com/s/ap/20100326/ap_on_hi_te/us_tec_at_t_health_care;_ylt=AiAu2PI.byqZgkhal.4ZYs2yBhIF;_ylu=X3oDMTJwaG5mMnJpBGFzc2V0A2FwLzIwMTAwMzI2L3VzX3RlY19hdF90X2hlYWx0aF9jYXJlBGNwb3MDMwRwb3MDMTAEc2VjA3luX3RvcF9zdG9yeQRzbGsDYXR0d2lsbHRha2Ux
Presumably all other organizations that offer employee health care will have to make similar moves.

Unfortunately, the public will not put these together. They will approve of the expansions in health insurance and disapprove of cuts in coverage, but they won't look at the net of the two effects.

Also health insurance may cause Treasury bond rates to rise, meaning bigger deficits. See http://www.ft.com/cms/s/0/c51fbbce-3908-11df-8970-00144feabdc0.html
Few in the public or media will see the higher borrowing rates as a consequence of the new health care plan.

The Bill authorizes the government to sell long term care insurance at a loss. That should be a popular deal for working people, but the extra tax money to pay for the subsidy* will be invisible. http://www.foxnews.com/politics/2010/03/26/little-known-long-termhealth-care-provision-budget-buster-say-critics/

*In theory there is not supposed to be any subsidy, but critics say there will be a substantial one. The record of other government programs supports the critics. E.g. Social Security and Medicare were supposed to be self-supporting!

Regarding the AT&T caharge, here are the details from that same article -

AT&T said Friday that the charge reflects changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage.

White House spokesman Robert Gibbs said Thursday that the tax law closed a loophole.

Under the 2003 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 spent.

Seems like a very responsible change to make. Bravo to Congress, keeping our health care costs unsubsidized by removing phantom tax deductions to corporations.

Jennifer Rubin in Commentary points out Henry Waxman's apparent attempt to intimidate companies from disclosing their anticipated costs stemming from health care "reform."

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