Bush Acts to Reward Companies Who Cut off Seniors' Drug Coverage

[joeunderdog]

Late last year, President Bush promised retirees that "if there's a Medicare reform bill signed by me, corporations have no intention to dump retirees ...What we're talking about is trust."1 The White House and its congressional allies backed up Bush's assertion by claiming the bill included a special tax subsidy to "encourage employers' to retain prescription-drug coverage" for their retirees' and not to cut them off.2

But just three months after Bush's pledge, the Wall Street Journal now reports that the White House quietly added "a little-noticed provision" to the bill that allows companies to severely reduce - or almost completely terminate - their retirees' drug coverage "without losing out on the new subsidy."3 In other words, the president did not just break his promise to sign a bill that prevents seniors from losing their existing drug coverage. He actually acted to reward companies who cut off their retirees with a lavish new tax break.

The provision was no mere oversight by the president. The major backers of the provision were Lucent Technologies, General Motors, Dow Chemical and SBC Communications - all major campaign contributors to the president. According to the non-partisan Center for Responsive Politics, executives from those companies have donated almost $140,000 in hard money and $2.5 million in soft money to Bush and his party since 2000.

http://www.misleader.org/daily_mislead/Read.asp?fn=df01082004.html

NEVER screw the elderly, especially during an election year. Dems should pounce on this.

[papau]

1. But will the Insurance broker known as AARP really care?

Will anyone at DU write to the AARP and mention that they are unhappy about this?

[tom_paine]

7. Of course the Insurance Company AARP won't care

They are a BUSINESS, and businesses are not in the business of caring about or for some runny-nosed old folks.

Businesses like AARP are in business for one kind of business...to make money.

End of story. So many institutions in Orwellian Imperial Ameika now do exactly the opposite of what they say, from the EPA making sure none of those brave rescue workers ever new the air had 1000X toxic levels of dioxin to the Board of Labor facilittating cutting salaries.

It's all very predictably Soviet, what the Busheviks have done to our once-free, once-proud nation.

AARP like the rest.

[cthrumatrix]

16. this is where i get "frosted" because we have NO dem. senators speaking

out on this....they are to represent us....this really gets me.

They should be holding anyone that voted yes on medicare reform bill to task. Asking them questions having interviews...where is the press to investigate and start a review of this "gift to big busines" subsidized by the people...again.

[snippy]

24. This perfectly illustrates the failure of the democratic party to have

a national strategy to win elections. If a democratic president or Congress had been responsible for this provision of the law, the RNC would have blast faxed it to thousands of media outlets, instructed the obedient journalists and pundits on what to write and say about it, and ordered every republican in or running for Congress or the Senate to provide local media with a statement or interview. It would have received a huge amount of coverage.

This is an issue that would make millions of American retirees, near retirees, their children and families, and naive republican voters really, really, really pissed off at Bush and the republican party. This also is an issue that perfectly illustrates the values of the republican party. And the democratic party does nothing.

[cthrumatrix]

17. the "kicker is" companies get to report the subsidies as income NOW...

for payments they won't receive for a couple of years....here's the post from the WSJ ...yesterday.

January 8, 2004
U.S. Drug Subsidy
Benefits Employers

By ELLEN E. SCHULTZ and THEO FRANCIS
Staff Reporters of THE WALL STREET JOURNAL


Some companies with many retired workers are expected to post big earnings gains for 2003 or 2004, thanks to accounting guidelines for subsidies under the federal prescription-drug program.

When Congress approved prescription-drug benefits for Medicare recipients last year, it granted benefits for the 65% of large employers with retiree health-care plans, providing funds for companies that maintained their prescription-drug coverage for retirees.

more

The subsidy won't be paid for another two years, but the Fianancial Accounting Standards Board of Norwalk, Conn gave permission yesterday for companies to book the value of their anticipated government payments in 2003 financial statements, if they believe they can accurately predict the effect of the subsidy.

more

So if an employer and a retiree each pay $1000 toward the retiree's medical costs, the employer subsidy is caluclated in the full $2000, bringing the company a total subsidy of $490, rather than the $210 that it would get if it received a subsidy only on its share.



Only in America....it goes on and on...and gets more detailed. This was a "corporate gift" from bush.... period.

http://online.wsj.com/article/0,,SB107350927860976500,00.html?mod=home%5Fwhats%5Fnews%5Fus

[Judi Lynn]

18. Stunned silence......... Thanks. n/t

[cthrumatrix]

20. now for the real "stunner" --- the subsidies are TAX FREE --- (WSJ )

The new federal program calls for employers to be reimbursed for 28% of the cost for prescriptions of more than $250 per retiree, up to an annual subsidy of $1,330 per retiree, beginning in 2006. The subsidy will be significant at companies with thousands of retirees ages 65 or older, because prescription-drug costs make up a large part of the expenses that employers incur for seniors under their retiree medical plans.

Thanks to a little-noticed provision in the new law, the government will calculate the subsidy based on both what the employer spends for prescription drugs and what the retiree spends.

So if an employer and a retiree each pay $1,000 toward the retiree's medical costs, the employer's subsidy is calculated on the full $2,000, bringing the company a total subsidy of $490, rather than the $210 that it would get if it received a subsidy only on its share.

As a result, when combined with tax and accounting rules, the program allows employers in some cases to use the subsidy to erase the entire cost of prescription drugs for retirees, or even turn a profit from a drug plan. For instance, if a Medicare-eligible retiree's prescription costs are $2,550, and his former employer pays $1,000 of it, under long-standing tax rules, the employer can deduct its full $1,000 for tax purposes, meaning the after-tax cost to the company is $650 at a 35% corporate tax rate.

Meanwhile, the company doesn't pay taxes on the subsidy it receives, thanks to another provision of the new Medicare law. So in this example, the employer would receive a subsidy of $644, based on the full amount paid by both employer and retiree, reducing the company's cost for the retiree to $6 for the year.
snip

http://online.wsj.com/article/0,,SB107350927860976500,00.html?mod=home%5Fwhats%5Fnews%5Fus

[cthrumatrix]

22. Big business asked FASB for the immediate "income" for 2003-2004 (WSJ)

snip

In December, the FASB had said it might not let companies start reporting the effect of the Medicare savings until sometime in the future, because it was premature for employers to estimate the subsidy.

But companies with big retiree health obligations, including SBC, asked the standard-setters for permission to report the savings in their 2003 financial results. "It's important to provide the best information to shareholders," said John Stephens, SBC's comptroller.

Under FASB's move Wednesday, companies accounting for the subsidy in 2003 must disclose the effect on a separate line on the income statement.

In booking the payments, companies will use the value of the projected subsidies to offset liabilities previously recorded to reflect drug benefits they promised retirees.

http://online.wsj.com/article/0,,SB107350927860976500,00.html?mod=home%5Fwhats%5Fnews%5Fus

[cthrumatrix]

23. almost criminal - seems like a newly designed wealth transfer program

the Wall Street Journal Article goes on to say:

"In fact, benefits consultants are designing employer-sponsored prescription plans to save companies more money by unloading costs on their former workers without losing out on the new subsidy."

-----

Translation...design new plans to offload your costs ...while getting subsidies from the seniors citizen needs.

Where is Elliot Spitzer? This cannot be the intent of what was shared with the public...or can it?

[denverbill]

2. Whoa! I bet that's the lead story in every paper in the country...NOT!

Is anyone surprised? Anyone?

[Emillereid]

3. What a scumbag!

[joanski01]

4. But, but, but my letter from

Rick Santorum explaining the Medicare bill to me said that companies would be given a 35% subsidy to encourage them to keep existing prescription drug coverage. Now, little Ricky Santorum would never lie!!!!!!!!!!!!

[louis-t]

5. chin up folks, one of these scandals has got to take hold

sooner or later. I refuse to believe the American public is completely blind AND stupid.

[pinto]

8. kick, the key is to stick with the facts, repeatedly, and on topic, repeat

[0007]

19. Very few signs that this will even happened

How long has the "Leave no Child behind" been going on now? Very little from the media about this. And children have more clout than the elderly.

[izzie]

6. GOP really means Get Old People I guess

n/t

[Gman]

9. The CWA's contract with SBC is up in April

benefits will be a huge issue this year like no other contract since 1983. Management is gearing up for a strike like they've done for no other contract since 1983.

It's common knowledge that SBC is going after non-management benefits. If so there'll likely be a strike in the SBC system. A stike will shut down SW Bell, Pacific Bell and Ameritech.

---on edit---

While SBC doesn't formally recognize the CWA as a bargaining representative for SBC retirees benefits, retirees are usually included in contract settlements. We'll see how badly SBC guts retirees in April.

[salin]

10. This needs to stay kicked - everyone read it - there was also an item

I read a couple of days ago about the drug "discount" cards. Seems the law is written that in that period the companies can use their buying power to negotiate prices down (though in the permanent system that is verbotim)... there is absolutely NO requirement for the companies to pass along those savings. They can bargain down 20% and pass along 5%. It is ALL written to benefit corps - there aren't even provisions in it to try to help seniors along the way. Now this? And AARP is on board?

People need to write AARP and ask for the REAL details. Raise these cases and ask for explanations.

[SharonAnn]

11. Thanks, I sent this on to some Lucent and SBC retirees.

They voted for Bush the first time, now let's see what they think.

[Hell Hath No Fury]

12. I've been trying to track down....

this story on Google but I can't find any mention of it. I want to add it to my site -- maybe I'm just using the wrong search words.

Anybody have better luck than I?

[nothingshocksmeanymore]

13. *sigh* And how do we make this known prior to November?

[saigon68]

14. Kick n/t

[leftchick]

15. everything the man says is

a fucking lie. Thanks again liar in chief!..... :grr:

[cthrumatrix]

21. will our Senators please tell the seniors about this "gift"..... stand up

or you will here it when it's time for relection.

Better yet....this is a perfect campaign issue for Dean to share with the seniors becuase this is a "class A" wealth transfer program...period.

Let's get this to the Dean campaign as an example of bush politics, with the help of the complicit AARP...and the bought dems/reps who have combined to "take from the people".

Perfect campaign topic...for the whole year. If I were a dem senator ...I would think long and hard about coming out and sharing with the "people" mistake that was made.

This is your chance....don't say you didn't have any idea.



Next step are phone calls, letter campaigns and your vote.

[dusty64]

25. Any coverage of this?

This is HUGE and I have seen nothing of it outside of this forum.

[snippy]

27. It is huge. Lack of coverage is disgusting and the democrats' fault.

[cthrumatrix]

28. you really do wonder about the "two party system" ....both bought

[snippy]

30. I don't object to the democratic party being bought as much as I resent

the fact that it apparently has no strategy to win elections, unlike the republican party.

[joeunderdog]

29. I saw Kennedy on C-SPAN slaughtering the MCR bill last month.

He was talking to seniors about what it really meant. The thing about seniors is, they do network around political issues. You won't fool the ones without meds into thinking they have their meds. For a large percentage of this huge voting block, this is THE ISSUE.

[snippy]

31. It should be a huge issue.

Not only for seniors and their families but also for many fiscal conservatives and naive republicans. It is a great illustration of who the republican party cares most about. Clinton would have hammered the republicans for something like this.

[loudsue]

26. This whole fiasco is deplorable....

any Dem Senator/Rep who voted for this horrible bill needs to be "outta here" in the next primary.

We need MORE AND MORE DUers to run for office in this country. I'm convinced it's the only way to get the message out to the people about what is REALLY going on!

Of course, Diebold controls the primaries also, so it wouldn't come to anything, other than getting the word out!

BBV is the thing that people need to be most concerned about. If we had real elections in this country, we'd have a ghost of a chance. As it is, there is OVERWHELMING evidence that elections have been tampered with for way too long.

The evidence is in the congress. Nobody in their right mind would have elected this bunch....except some corporation who bought and paid for their "elected" officials.

:kick:

[proud patriot]

32. Bush screwing the elderly Video

http://www.bushin30seconds.org/view/13_large.shtml