Waxman, Stupak Ask Big Telcos How Healthcare Reform Raised Costs
Leading members of the House Commerce Committee asked AT&T and Verizon to explain their claims that the new healthcare law will increase the telephone companies’ costs. In letters sent Friday to CEOs of the two telcos and two other companies, Chairman Henry Waxman, D-Calif., and Oversight Subcommittee Chairman Bart Stupak, D-Mich., said the subcommittee plans a hearing at 10 a.m. April 21 on the matter. “We request your personal testimony at this hearing,” they told AT&T CEO Randall Stephenson and Verizon CEO Ivan Seidenberg.
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AT&T has said it will take a charge of $1 billion in the first quarter because the new law changes the tax treatment of the Medicare Part D subsidy (CD March 29 p9). A Verizon executive told employees in an e-mail that the new law meant the company’s costs would increase “in the short term.” The executive said changes related to the Part D subsidy “will make it less valuable to employers, like Verizon, and as a result, may have significant implications for both retirees and employers.” A Verizon spokesman said the company is “gathering information and will provide a timely response.” AT&T declined to provide additional comment.
"The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern,” Waxman and Stupak said in the letters. “They also appear to conflict with independent analyses.” The Congressional Budget Office estimated that companies that insure more than 50 employees would see decreases of up to 3 percent in average premium costs per person by 2016, and the Business Roundtable predicted the law could reduce costs for businesses by $3,000 per employee over the next ten years, they said. Waxman and Stupak asked the companies to provide by April 9 their own analyses and any documents prepared or reviewed by company executives related to the new law’s impact. The legislators also sent letters to Deere and Caterpillar executives.
Other telcos have so far been quiet on the healthcare law’s effect. A Sprint Nextel spokesman said the company is “still reviewing the new law and determining what if any impact it may have.” A Qwest spokesman said the company couldn’t comment by our deadline.