If any member of Congress thinks they are not creating havoc and hurting millions of Americans with their version of health care reform they should read this (with more to come no doubt):
Public Service May Drop Retiree Drug Benefits
Jan. 14 (Bloomberg) — Public Service Enterprise Group Inc., the owner of New Jersey’s largest utility, may drop prescription drug benefits for retirees if the U.S. passes health-care legislation that changes certain tax subsidies, its chief financial officer said.
Employers receive a tax-exempt subsidy to sponsor prescription drug coverage for retirees over 65 years old, keeping them off of the government’s Medicare plan. Under a possible health care bill, the subsidy would become taxable, causing company health-care costs to rise and forcing employers to take charges against their financial statements, Caroline Dorsa, Public Service’s CFO, said in a telephone interview.
“We are supportive of health-care reform overall and of the bill in general, but this particular provision would cause us to have to reconsider offering the retiree drug benefit,” Dorsa said. “This is something we can’t manage around. That’s the problem. The only way you manage around it is not to offer the benefit.”
Newark-based Public Service has about 10,000 retirees and dependents, whom it provides with prescription drug benefits. Another 5,500 current employees and dependents will be eligible in the future. Employees who joined the company after about 1996 do not take part in the plan.
At Public Service, medical and prescription drug costs total about $1.1 billion in future liabilities, or the amount it will have to pay out. Prescription drugs account for about 45 percent of that, Dorsa said.
If Public Service kept funding the retirees’ drug benefits it would have to take a charge against its income statement and another one against its shareholder equity in the same quarter the law is approved, Dorsa said.
The charges would have “material impact” on the company, Dorsa said, declining to give specifics. The charges would also increase the company’s financing costs.
Public Service fell 23 cents, or 0.7 percent, to $32.82 a share in New York Stock Exchange composite trading.
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