stockingfull wrote:Who said they're dropping coverage, Richard?
Follow along here now, usually following the links I provide will answer the question you might ask. Pelosi and Reid were warned in December this could happen in the letter I referenced twice already. It was signed by representatives of Boeing, Caterpillar, John Deere & Company, Exelon, Navistar, Public Service Enterprise Group Inc., Met Life and Verizon. They knew this was coming a long time ago. Here's recap of the relevant part of the letter, the underlines are mine to highlight the answer to your question:
The Medicare Prescription Drug Improvement and Modernization Act of 2003 added a new prescription drug benefit to the Medicare program for senior citizens. The Act also included a 28 percent subsidy for employers offering retiree prescription drug coverage to encourage them to “stay in the game” (as opposed to dropping coverage, which would have resulted in additional costs for the Medicare program). The strategy was effective, and the subsidy has enabled employers to offer prescription drug coverage to millions of retirees who would have otherwise elected to participate in Medicare Part D. The employer-sponsored plans have resulted in reduced costs to the government and to the retirees.
Health care reform proposals now before the House and Senate include changes to the RDS Program that would negatively impact both retirees and companies. The change would make the 28 percent subsidy taxable to employers, effectively reducing the value of the subsidy. As a result, we would anticipate significant reductions in employer-sponsored retiree prescription drug coverage. Some analysts of the proposal have characterized the non-taxable nature of the subsidy as “double-dipping” because companies receive a tax-deduction for the cost of the coverage and then receive a 28 percent tax-free subsidy. However, the cost of the coverage is considerably more than the combined value of the deduction and the 28 percent. Companies are absorbing more of the total cost than either the retirees or the government. Taxing the subsidy means that more companies will eliminate or reduce the coverage, and more retirees will shift to Medicare Part D, which will create more cost for both the government and the retirees. If more companies than predicted by the Government Accountability Office shift away from coverage, then the provision could result in a net revenue loss rather than the predicted slight revenue gain.
For starters they have less incentive to keep it and an easy way out. Why would these companies not reevaluate what they offer especially when they know the government is going to pick up those they drop? It doesn't take a genius to realize it would be easy for them to do since the people being covered are going to get some coverage whether the company or medicare is providing it. If enough of them drop coverage the government will see a net loss
in revenue from this provision in the health care bill which was supposed to be a net gain and those receiving the coverage will probably see less benefits. We're not talking about pennies here but billions of dollars they could save by simply dropping them. This could also drastically lower the estimates to the expected medicare savings because not only have they lost the anticipated revenue from the taxes they will also be paying more. Understand now?
Whoever decided this was a good idea needs to get their head checked for rocks where their brain should be.