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President Obama signed into law, yesterday, final changes overhauling the U.S. health care system. Most of the law doesn't take effect for some time, but its impact is already being felt by some American companies. AT&T, Caterpillar and John Deere, among others, have warned they stand to lose millions of dollars because of a single passage in the law. NPR's Jim Zarroli explains what this dispute is all about.
JIM ZARROLI: So Congress started looking for ways to encourage private employers to stick with their private drug plans. James Klein is president of the American Benefits Council, which represents large employers.
JAMES KLEIN: Congress was very, very careful. They tried to determine what kind of a subsidy they would need to provide to encourage employers to retain coverage.
ZARROLI: It seemed, on the surface, like a pretty sweet deal, and when Democrats started overhauling the health care system last year, they decided to scrap it, says Uwe Reinhardt, professor of economics and public affairs at Princeton.
UWE REINHARDT: The Obama administration said, well, that doesn't really make sense because you now allow this company to deduct, from its income taxes, an expenditure that was actually not made by them but by the U.S. taxpayer.
ZARROLI: Under the newly passed health care bill, companies still get the subsidy for offering drug coverage, but they no longer get a tax deduction as well. The administration says this will bring in $4.5 billion to the government. But that will come at the expense of companies like AT&T, which says it will lose as much as a billion dollars over time. Again, James Klein of the American Benefits Council.
KLEIN: Now the rug is being pulled out from under employers by requiring them to immediately take an accounting charge for this future change in tax liability.
ZARROLI: Mr. TRAVIS SULLIVAN (Director of policy and strategic planning, Commerce Department) I think it's important to put this issue into the broader context, which is this is a health care package that is going to, overall, reduce costs on businesses by billions of dollars.
ZARROLI: Of course a lot of these companies have union contracts, so they can't just eliminate benefits whenever they want to. But Princeton's Uwe Reinhardt says some employers may succeed in dropping drug plans, and that says something about just how complex the health care economy really is.
REINHARDT: I mean, how big that effect would be, we don't know - but some effect there will certainly be. It just shows you how complicated everything is. You know, it's just like pulling on a spider web. You pull on one strand, the whole web moves.
ZARROLI: Jim Zarroli, NPR News, New York.
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