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Corporate disclosures about the federal health-reform legislation passed this spring continue to trickle in, with some striking differences in how companies see the measure.
Most of the disclosures are simply additional companies disclosing the tax-hit we (and others) have already written about, stemming from changes to a federal subsidy for retiree-health plans. Some of the more recent disclosures: Schlumberger Ltd. (SLB), with a $40 million charge; Beckman Coulter (BEC), at $8 million; Verizon Communications (VZ) at $962 million; Eaton Corp. (ETN) at $23 million; Exxon Mobil (XOM) at $200 million; Eli Lilly (LLY) at $85.1 million; and Norfolk Southern (NSC) at $27 million.
But what really interests us is how some of the biggest players in healthcare are talking about the new law in their filings. Take Bristol Myers Squibb (BMY), for example. In its April 29 earnings release, the company said that first-quarter sales fall by $49 million, and pre-tax income by $42 million, thanks to “higher rebates to Medicaid and Medicaid manged care organizations.” Another $21 million was due to the retiree prescription subsidy tax change. In its 10-Q filed the same day, Bristol Myers said it expects other additional costs, including more discounts to certain rural hospitals and cancer hospitals, among others, and steep discounts on some prescription drugs for Medicare patients. Bristol Myers observes, without any apparent joy, that it will get 12 years of protected sales for “biologic” products before facing competition from cheaper generics, and says that it expects “the negative impact of healthcare reform in 2011 to be approximately twice the impact expected in 2010.”
Contrast that with health insurer Aetna (AET) and drug-store giant Rite Aid (RAD). Both took a more positive approach toward the new legislation.
While warning that it “is reasonably possible that Health Care Reform, in the aggregate, could have a material adverse effect on our business operations and financial results,” Aetna also says in the 10-Q it filed on April 29 that “Health Care Reform presents us with new business opportunities.” (The company’s litany of the measure’s provisions on pages 35-37 of the filing is a good summary of the bill from an insurer’s perspective.)
Just how it will balance out remains to be seen. “Many significant parts of the legislation require further guidance and clarification in the form of regulations,” Aetna said in the filing. “As a result, many of the impacts of Health Care Reform will not be known until those regulations are enacted, which we expect to occur over the next several years.”
Moreover, the insurer makes the case that the broader repercussions go beyond the specifics of the new federal laws:
“Health care reform will significantly alter the federal structure that shapes the state regulation of health insurance, and states will be required to significantly amend numerous existing statutes and regulations. … we expect many states to consider legislation to extend coverage to the uninsured through health insurance exchanges, increase the limiting age for dependent eligibility, restrict health plan rescission of individual coverage, mandate minimum medical benefit ratios, implement rating reforms and enact an autism benefit mandate.”
Rite Aid, meanwhile is practically upbeat in the 10-K it filed on April 28, thanks in part to the end of the so-called ”donut hole” in Medicare prescription coverage, which left many seniors paying a significant portion of their drug costs. “We expect the estimated additional 32 million people who will be covered by health insurance in 2014, and the closing of the ‘donut hole’ in Medicare Part D to be good for our business,” the filing notes. That donut-hole issue is one that Bristol Myers cited as a negative, thanks to the discounts on brand-name drugs it will have to provide to Medicare recipients under the change.
Other disclosures are shedding additional light on some of the longer-term effects of the legislation. Medical device maker Teleflex Inc. (TFX), for example, noted in its April 28 10-Q that “the expansion of medical insurance coverage should lead to greater utilization of the products we manufacture,” counterbalancing to some degree the 2013 onset of a 2.3% excise tax on medical-device sales. Teleflex is one of the first companies we’ve seen quantifying the impact of the law beyond the retiree-health provision, saying the excise tax could cost it $16 million a year. Still, the company notes, “As this new law is implemented over the next 2-3 years, we will be in a better position to ascertain its impact on our business.”
So there you have it. Consider it the yin and the yang of the new legislation.
Image source: MAMJODH via Flickr
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MIAMI — The Miami-Dade County Health Department and Florida International University will establish the first Academic Health Department in Florida.
The Miami-Dade County Health Department is planning to consolidate its administrative and program offices at FIU’s Modesto A. Maidique Campus, bringing part of its workforce to southwest Miami-Dade and forming a partnership that will strengthen the educational experience of students pursuing health careers.
An Academic Health Department is an organized partnership between schools of public health, medicine, nursing and allied health sciences with public health departments. These partnerships create dynamic academic-practice collaborations, which effectively pool the assets of all institutions involved.
The administrative and program offices of the Miami-Dade County Health Department are currently housed in eight different locations around the county, causing operational difficulties and inefficiencies, as well as logistical challenges, said Lillian Rivera, administrator of the Miami-Dade County Health Department.
“Through this partnership, we can cut costs and become a more efficient department,” Rivera said. “We also look forward to playing an important role in preparing students pursuing careers in public health and related professions to meet the 21st century challenges associated with the health needs of our population.”
The Miami-Dade County Health Department offices will be located in FIU’s Academic Health Sciences Center, which includes the Herbert Wertheim College of Medicine, the Robert Stempel College of Public Health and Social Work, the College of Nursing and Health Sciences, and the College of Arts and Sciences. The Academic Health Sciences Center is expected to generate 66,000 new jobs and have an annual economic impact of more than $8.9 billion by 2025.
By consolidating administrative offices at FIU, the Miami-Dade County Health Department is expected to save the state at least $8 million over the next 25 years. The building, estimated to be 90,000 square feet, comes with an authorized budget of up to $32.5 million. The project is included within the 2010-2011 budget passed by the Florida Legislature. Pending the governor’s approval, the building will be financed through a bond and repaid through Department of Health lease payments.
The health department component of the new complex will complement a previously funded $23.3 million Stempel College of Public Health and Social Work academic facility and a new $10 million Ambulatory Care Center funded by a grant from Miami-Dade County. The clinic and academic facility are in the planning and design stages.
“We are thrilled to welcome the Miami-Dade County Health Department as our new neighbor,” said Sweetwater Mayor Manny Maroño. “By bringing well-paying jobs to our area, the new Health Department facility represents a tremendous economic boost. This is a great example of how strategic partnerships can benefit our community.”
The planned facility will increase joint teaching, research, and clinical training opportunities for FIU students, faculty and health professionals in the health department. The move also will expand opportunities for both institutions to collaborate in attracting grants that can help improve health care in the region.
The collaboration between FIU and the Miami-Dade County Health Department also has the potential to create internship opportunities through which FIU students would work with public health experts in a clinical and research environment. The facility will include a public health teaching clinic with an environmental laboratory and a nutrition/ breastfeeding program.
“This is the kind of innovative, mutually-beneficial, strategic partnership that will enhance the education of our students with real life experience,” said Fernando Treviño, dean of the Stempel College of Public Health and Social Work. “At the same time, it will improve the local state-run health facilities and save the state significant money. It’s a win-win situation.”
Media Contacts: Maydel Santana-Bravo at 305-348-1555 or Olga Connor at 786-336-1276.
-FIU-
About the Miami-Dade County Health Department:
The Miami-Dade County Health Department is part of the Florida Department of Health. The mission of the Miami-Dade County Health Department is to promote and protect the health of our community through prevention and preparedness today, for a healthier tomorrow.
About FIU:
Florida International University is one of the 25 largest universities in the nation, with nearly 40,000 students. More than 100,000 FIU alumni live and work in South Florida. Its colleges and schools offer more than 200 bachelor’s, master’s and doctoral programs in fields such as engineering, international relations and law. As one of South Florida’s anchor institutions, FIU is worlds ahead in its local and global engagement, finding solutions to the most challenging problems of our time. FIU emphasizes research as a major component of its mission. The opening of the Herbert Wertheim College of Medicine in August 2009 has enhanced the university’s ability to create lasting change through its research initiatives. For more information about FIU, visit http://www.fiu.edu.
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April 18, 2010 at 5:58 pm
Oh and Chris, there are pictures of CHeney and Rumsfeld shaking the hand of Saddam Hussein and his cronies.
Have fun choking because that rather shoots down any sense of superiority you get claiming making up stupid claims about Obama and Chavez.
April 18, 2010 at 5:57 pm
Chris wrote:
Bush was a humble person, a faithful husband, a dignified person in general.
He was arrogant and egotistical.
And as for “faithful husband” that has what to do with being President? No matter what you say he was one of our worst Presidents of all time.
Bush authorized a fools war in Iraq that did no small part in nearly bankrupting this country. He attacked Iraq despite them having nothing to do with 9-11. He let Osama bin Laden get away and he did little to deal with Al Qaeda. He authorized torture. He sacrificed much of our moral standing with the rest of the world. And domestically he continously screwed over the middle class and the poor while kissing the asses of the rich.
And you want to claim that Kennedy’s alleged affairs makes him a worse person then Bush? My..you do have a messed up sense of morality. Let me know when you want to bother to have an actual sense of morality. Because thinking that a person who cheated on his wife is worse morally then a person who ordered torture is just this side of being morally depraved.
April 18, 2010 at 3:02 pm
Historians are just liberal elitist pricks who look back at history and form an opinion on it. They don’t look at history any more objectively than they look at the present day. “Historian” is just a title given to someone with a hobby in reading history books. And those historians are just using W. as a scapegoat; there was that one American president (I forget his name) who lasted one month in the presidency. He got nothing done in that one month, needless to say, so you would think any objective “historian” would call him the worst. But the “historians” obviously based their conclusion on Bush being the worse simply because they didn’t like him.
“A loophole or gap in a law is common, and not a sign of incompetence.” Oh, okay. I’d have to argue that incompetence is common, then. (Well, that goes without saying when it’s in regard to Congress.)
“If insurance companies deprive coverage,…there will be litigation.” They wouldn’t be breaking any laws by denying coverage to anyone, because the law doesn’t say they can’t. I’m not saying they should deny coverage, of course, but looking at it objectively, they have that right. But I see you’ve jumped on the insurance-companies-are-evil bandwagon, even though they make only 3% profit.
“Unless Sauron is more effective in mustering Republicans against an amendment than he was the first time around. It would be a heckuva fight, with pro-life Republicans publicly repudiating their stands in order to force children to suffer and die.” It wasn’t just Republicans who were against the health-care takeover; Republicans were, Democrats were, and Independents were. And come on, guy, that’s a tad dramatic, “The Republicans want to force children to suffer and die!” Oh, okay.
“…The provision Sen. Feinstein had proposed to fix the problem was stopped by Republican.” Republicans against have not once tried to stop reform, and the Democrats who supported the health-care takeover have not once tried to initiate reform. The new bill does nothing to reform anything. It doesn’t increase competition because it still prevents you from purchasing insurance across state lines. There’s no malpractice-suit reform in there. Republicans offered numerous solutions while the Democrats literally locked themselves up behind closed doors to prevent the Republicans from having any part of the legislation. So, yes, the Republicans should be proud that they tried to prevent socialism and offered up true reform.
“It will be interesting to see how recalcitrant industries fight improved health care. The important first step in reining in costs was to expand coverage.” Coverage was expanded to some 10 or 15 million people at the expense of freedom and at the expense of reducing the quality of the health care to everybody else. Yay.
“Occasional wins by evil is not evidence that the war has been lost.” Good, this gives me some hope.
April 18, 2010 at 2:50 pm
You’ve never met Bush, and you don’t know much about him, do you.
April 18, 2010 at 2:47 pm
Good friends with Chavez? They’ve met once. Obama said Venezuela needs to get with the program, stand up for rule of law in the Americas. Chavez gave Obama a book.
You imagine a lot that didn’t happen and isn’t realistic. Obama’s no closer to Chavez than Dick Cheney is, just wiser in handling the nut.
Who cares what Castro says in an interview? Castro didn’t claim Obama’s anything other than a U.S. flag-waving patriot. I can’t find anything that suggests Castro approves of Obama’s policies, especially since Obama turned up the diplomatic heat on Chavez. What are you talking about?
April 18, 2010 at 2:21 pm
And apparently I suck at HTML.
April 18, 2010 at 2:18 pm
Nick Kelsier:
Yes, because W. cheated on his wife with countless women and thought he could do whatever he wanted just because he was the president. Bush was a humble person, a faithful husband, a dignified person in general.
Yes, because Saddam Hussein wasn’t a brutal dictator who killed hundreds and hundreds of thousands of his own people. The world is safer because that madman is dead. Because BUSH got rid of him. Hussein DID have WMDs (he used them against his own people, duh). The only thing Bush made a mistake at was warning Iraq that we were coming (the UN approved of the invasion, by the way, as did Congress). Because we warned Hussein (Saddam, not Obama), he was able to get the WMD over the border to Syria. We should have just gone in there with no warning. And we need to do the same to Iran, but Obama’s a weak rookie who likes to appease and pal around with dictators (he’s good friends with Chavez, and even Castro–former communist dictator of Cuba–approves of the way Obama is running America. Communists don’t approve of democracy, yet this communist approves of Obama’s job. Interesting, no?
Yeah, poor terrorists, being “tortured,” boo-hoo. We made blood-thirsty psychopaths THINK they were drowning, oh man, so harsh, so, so evil! Poor terrorists!
Now, I can’t WAIT for you to tell me how Bush “crashed the economy.” I can’t wait. Please tell me, seriously. Don’t hold back. Tell me what you think.
You:
You mean like Obama is doing now? On both counts? Kinda like that? Why are liberals so anti-rich? People get rich because they earned it. They get rich because of hard work and ambition, most of the time. Other times they inherit it, sure, but the majority of the time, they earned it. Jealous? Then try harder like they did. Don’t steal from them to pay for your unambitious, whiny self.
April 18, 2010 at 11:24 am
Ed writes:
It would be a heckuva fight, with pro-life Republicans publicly repudiating their stands in order to force children to suffer and die.
Really think they’re going to have much of a problem doing that, Ed? It’s not like they’ve shown much concern for the health and life of children after they’ve been born so far….
Claiming the Republicans are “pro-life” is like claiming that David Duke is pro-black.
April 18, 2010 at 10:13 am
Health care legislation as Waterloo – Oliphant (and Benson …
April 18, 2010 at 1:24 am
Not liberals based on polls who said Bush was worst ever: Historians, based on their comparison with every other president. (It’s a Rolling Stone story, and their website is down this weekend for dramatic revisions.)
A loophole or gap in a law is common, and not a sign of incompetence. It’s quite inventive of the insurance companies to claim to have found a way to deprive sick and injured children of coverage. I’m sure you read the article carefully. If insurance companies deprive coverage, contrary to the language of the conference report, there will be litigation. If by some fluke the insurance companies win that litigation, proving that Congress’s intent was not carried out in the language they passed, there will be amendments, unless Sauron is more effective in mustering Republicans against an amendment than he was the first time around. It would be a heckuva fight, with pro-life Republicans publicly repudiating their stands in order to force children to suffer and die.
The new law has protections of consumers built in, to resolve and head off some of the problems you fear, according to the NYT article (by my old friend Robert Pear, who is among the best in covering these issues):
Will insurance premiums rise? We were sure of it before, at about a 15% per year clip. Does the LA Times article say they will rise faster than that? It notes that the provision Sen. Feinstein had proposed to fix the problem was stopped by Republican’s obstreperousness (“Congressional rules” is what the article said). Republicans won’t be proud to trumpet this one, either, I’ll wager. We needed a good gross of Righty-Be-Gone to fix that problem (Why didn’t you note that it was the right that cause this problem? Are you ashamed of it, too?)
It will be interesting to see how recalcitrant industries fight improved health care. The important first step in reining in costs was to expand coverage. A public option to compete with insurance companies might have provided a good, market mechanism to fight undue increases, but since the Republicans have not allowed that yet, we’ll probably have to go the regulatory route.
Ironic that Republicans are driving increased regulation of private industry, no? Unprincipaled, unholy opposition to good government will create such problems, and every Republican should hang his or her head in shame.
My God is not incompetent. Evil is not benign, though, and must be fought at every turn, at every moment. Occasional wins by evil is not evidence that the war has been lost.
WordPress and HTML: Yeah, HTML is accepted at almost all WordPress powered blogs, and all WordPress hosted blogs that I have found. Good luck with your blog.
April 18, 2010 at 12:23 am
Anything Kennedy did as far as being a “disgusting human being” pales to W, Chris.
Least Kennedy didnt start a fools war in a country that did nothing to deserve invaded. At least Kennedy didn’t authorize torture. And at least Kennedy didn’t crash the economy, screw the middle class and suck the dicks of the rich.
April 17, 2010 at 10:42 pm
I agree with you about Truman. He’s just about the only Democrat I like. He made unpopular decisions that saved millions of lives (and not only the lives of Americans). And aside from being a disgusting human being, Kennedy was not too bad a president. Remember when you liberals pointed to Bush’s approval ratings (and still do) and said, “See? He’s the worst president in history”? Yeah.
Now, I’m glad you brought up this “no pre-existing conditions” thing. It was reported in the New York Times, one of Obama’s many personal fluffers, that while ObamaCare DOES prevent children from being DROPPED from coverage because of a discovered pre-existing condition, it does NOT prevent insurance companies from DENYING coverage to children with pre-existing conditions. That’s what happens when, in a mad rush to advance pure Marxism, you push through legislation before even taking time to proofread it, let alone read it at all. Remember what Pelosi said? “We have to pass the bill so you can see what’s in it.”
And just for kicks, from the LA Times, one of the most liberal, in-the-can-for-Obama publications around, we find this:
“Public outrage over double-digit rate hikes for health insurance may have helped push President Obama’s healthcare overhaul across the finish line, but the new law does NOT give regulators the power to block similar increases in the future.
“And now, with some major companies already moving to boost premiums and others poised to follow suit, millions of Americans may feel an unexpected jolt in the pocketbook.
“Although Democrats promised greater consumer protection, the overhaul does NOT give the federal government broad regulatory power to prevent increases.
“‘It is a very big loophole in health reform,’ Sen. Dianne Feinstein (D-Calif.) said. Feinstein and Rep. Jan Schakowsky (D-Ill.) are pushing legislation to expand federal and state authority to prevent insurance companies from boosting rates excessively.”
Your gods are completely incompetent.
Also, from one decent human being to another, I just made my WordPress blog last night and am still unsure of a bunch of things, one of which is whether or not I can use basic HTML in comments like this. Do you happen to know? I didn’t want to try it and then have my comment end up looking like crap because HTML is NOT accepted. There’s no preview button, so I figured I shouldn’t risk it.
April 17, 2010 at 10:07 pm
Like Truman, sometimes you pay a public poll price for doing the right thing. Still have to do the right thing.
Wait until the Republicans start campaigning on repeal of the “no pre-existing condition” clause. I can hardly wait.
April 17, 2010 at 9:37 pm
Meanwhile, his poll numbers keep falling….