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Congressional Spat Over Doctor's Medicare Pay Threatens Obama's Healthcare Reform Effort

June 16, 2010

By Don Miller, Contributing Writer, Money Morning

A Congressional stalemate over how to stave off a hefty pay cut to doctors treating Medicare patients threatens to undermine President Barack Obama's healthcare reform effort – even as the administration mails out a glossy brochure to reassure seniors the healthcare program is on solid ground. For the third time this year, Democrats and Republicans [...]

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Question of the Week: Do the Pitfalls Outweigh the Promise For the New Healthcare Reform Program?

March 31, 2010

[Editor's Note: We were surprised and pleased with the number of responses we received to the inaugural installment of our new "Money Morning Question of the Week" feature. The responses were noteworthy for their insights, and the passion with which the views were presented. Make sure to check out next week's question. Let your "vote" be heard.]

Money Morning Staff Reports

When U.S. President Barack Obama signed the new healthcare-reform bill into law yesterday (Tuesday), it ended months of political bickering and maneuvering, and began a new chapter in the nation's healthcare saga – one in which the country will feel the effects of this sweeping, costly and controversial policy overhaul.

The fact is that many Americans will have healthcare for the first time ever. Offsetting that bright spot, however, is the reality that the program could add trillions in debt to the country's already burgeoning national debt, further complicating the matter.

Going forward, it will now be left to the pundits, analysts and the healthcare industry to decipher what these provisions really mean for the industry, for individuals, for taxpayers – and even for investors.

But here at Money Morning, we wanted to know what you think about this new law. That's why we made healthcare reform the inaugural topic in our new "Question of the Week" feature.

Money Morning Question of the Week: U.S. President Barack Obama's controversial healthcare proposal is now law. What do you think? How do you feel? Do you think it's a beneficial or harmful move for you as a consumer, as an investor, and as a taxpayer? What do you think it means for our nation's economy?

What follows is a sampling of the enthusiastic and passionate responses that we received. Make sure to also check out next week's "Question of the Week," a query that seeks your thoughts on the growing levels of U.S. debt.

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Healthcare Reform Losers: Companies Providing Retiree Benefits Face Multi-Million Dollar Tax Costs

March 26, 2010

By Kerri Shannon, Associate Editor, Money Morning

After sending letters of protest to Congress in the months prior to the healthcare law's approval, U.S. companies are now facing multi-million dollar after-tax hits this year due to a tax provision in the new legislation, labeling them healthcare reform losers instead of winners.

Part of the new healthcare law places a federal income tax on government subsidies given to companies that provide retirees and their spouses with drug benefit plans. The 28% subsidy was created as Medicare Part D, adding a prescription plan for senior citizens to the Medicare Act of 2003. To encourage companies to continue offering retirees a drug plan, the tax-free subsidy reduced companies' costs. Fewer senior citizens then went through Medicare's prescription program – which would have cost taxpayers much more than the subsidy price.

Caterpillar Inc (NYSE: CAT) and Deere & Company (NSYE: DE) are just two of the businesses that fought the new stipulations. The manufacturers estimate the tax will cost them $100 million and $150 million this year, respectively. Other companies who will pay handsomely include AK Steel Corp. (NYSE: AKS) with $31 million in charges, and Honeywell International Inc. (NYSE: HON) with an estimated fee of $42 million.

Consulting firm Towers Watson & Co. (NYSE: TW) estimates these taxes could cost companies about $233 per person receiving drug benefits – a hefty price tag when a company gives benefits to 40,000 retirees, like Caterpillar.

Overall, more than 3,500 companies offer drug benefits to 6.3 million retirees. Although the tax won't be effective until 2011, accounting practices force companies to recognize the fees in the period in which the law is signed. That means the tax could nab $14 billion from corporate profits in a year when companies were hoping to recover from huge losses during the recession.

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We Want to Hear From You: What Do You Think About the New Healthcare Law?

March 25, 2010

Money Morning Staff Reports

After months of controversy, political bickering and maneuvering, and intense media speculation and scrutiny, this week became a historically significant moment in the annals of U.S. healthcare when U.S. President Barack Obama signed the new healthcare bill into law. Thus begins a new chapter in the healthcare saga, when the country will feel the effects [...]

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Drug Companies and Hospitals Get a Boost from Healthcare Reform

March 24, 2010

By Kerri Shannon, Associate Editor, Money Morning

After months of trying to predict how the healthcare reform proposals would affect the respective futures of their industries, drug companies and hospitals are optimistic about the prospective long-term profits the final version of the health care reform bill could bring them.

President Barack Obama yesterday (Tuesday) signed the $940 billion health care reform bill with support from pharmaceutical companies and the hospital industry. Both will benefit from a sharp increase in the number of insured customers, as the bill expands healthcare to up to 32 million more people.

While the bill will cost tens of billions of dollars over the next 10 years, the planned reforms create something drug companies and hospitals can't live without: paying consumers.

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Shaky CBO Deficit Projections Help Healthcare Reform Bill Pass House

March 23, 2010

By Don Miller, Contributing Writer, Money Morning

When the comprehensive healthcare reform bill won approval from the House on Sunday, some of the swing lawmakers were won over by a new Congressional Budget Office (CBO) analysis showing the bill will slash the deficit by over $1.3 trillion over the next 20 years.

But at a time when the U.S. budget is already saddled with hefty doses of red ink, there's a growing debate about whether the new bill will reduce the deficit or evolve into another entitlement program that will expand the country's debt beyond already record levels.

Even though the bill – which President Barack Obama has hailed as the "most significant effort to reduce the deficit since the Balanced Budget Act" of the 1990s – will cost the federal government $940 billion over a ten-year period, the CBO said it will increase revenue and cut other costs by an even greater amount.

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Teva Pharmaceutical Wins Fight in the Generic Drug Market Battle

March 19, 2010

By Kerri Shannon, Associate Editor, Money Morning

Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) will buy sought-after German generic producer Ratiopharm for $4.97 billion, continuing a trend of highly competitive merger-and-acquisition (M&A) activity in the pharmaceutical industry. Competitors have pursued Ratiopharm for nine months because of its position as the second biggest generic producer in Germany. It was put up for sale in [...]

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Can Democrats Dislodge the Debate Over Healthcare Reform?

March 2, 2010

By Don Miller, Contributing Writer, Money Morning

If U.S. President Barack Obama goes ahead with a plan to have Democrats invoke a parliamentary gambit known as "reconciliation" to pass healthcare reform, a little known provision in the budget cycle ensures that Washington politicians will get to the endgame in less than 60 days.

One of the peculiarities of reconciliation is that it is a creation of the 1974 Budget Act and is linked to the annual budget cycle in Congress. It has been used to pass more than 22 tax cuts and deficit reductions over the years.

But the Budget Act specifies that Congress must complete action on its budget resolution by April 15 of each year. Once the budget resolution conference report is adopted by both the House of Representatives and the Senate, its terms govern the remainder of the budget process for that year – meaning no further spending measures can be introduced, including healthcare reform.

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Obama's Targets Insurers with $950 Billion Health Care Reform Plan

February 24, 2010

By Kerri Shannon, Associate Editor, Money Morning

Health insurance providers are protesting this week as the government comes a step closer to strengthening its industry regulation by calling for new "common sense" practices.

This latest development in U.S. President Barack Obama's push for health care reform occurred Monday when the White House released a sprawling $950 billion proposal in anticipation of tomorrow's (Thursday's) scheduled summit.

Obama's plan, which combines the respective reform bills of the Senate and the House of Representatives, suggests drastic changes are coming for insurance providers.

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What the Government Isn't Telling You About the New Healthcare Bill

December 23, 2009

By Martin Hutchinson, Global Investing Strategist, Money Morning

In a vote that was held at 1 a.m. Monday, the Senate approved a procedural measure that makes it likely a version of the national healthcare bill will make it into law.

In fact, by taking advantage of an obscure rule that allowed lawmakers to start their day and vote on the measure well before dawn, Senate leaders were able to approve the measure and keep alive the possibility that the healthcare bill will be passed by Christmas.

But if you study the Senate bill carefully – no matter what your political persuasion may be – you have to wonder why they even bothered.

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