House Hearing on Retiree Health Benefits Scrapped

April 15, 2010 ( – The U.S. House Energy and Commerce Committee has scrapped plans to hold a hearing on a provision in the health care reform law curbing a federal tax break for employers.

A Business Insurance report said the tax break would help firms providing prescription drug coverage to Medicare-eligible retirees.

The hearing of the House Oversight and Investigation subcommittee had been scheduled for April 21 by the panel’s chairman, Representative Bart Stupak (D-Michigan) and Representative Henry Waxman (D-California), the chairman of the Energy and Commerce Committee. The move came after several corporations announced big charges against earnings for the change in the tax treatment of the prescription drug subsidies (Companies Begin to Report Healthcare Bill).    

According to the Business Insurance report, a memorandum from Representatives Waxman and Stupak sent to members of the subcommittee said the hearing was being canceled at the request of several companies “to allow more time for key health care reform implementation decisions to be made before holding a hearing.”

The report explained that under a provision in a 2003 law that added a prescription drug benefit to the Medicare program, employers providing coverage at least equal to Medicare Part D receive a tax-free subsidy equal to 28% of prescription drug costs.Employers no longer will be able to take a tax deduction for prescription drug expenses equal to the amount of the subsidy they receive as of 2013.The subsidy itself will continue to be tax-free. 

Lawmakers said assertions made by each company that the health care law would increase costs “appear to conflict with independent analyses, which show that the new law will expand coverage and bring down costs.” 

The Stupak-Waxman memo is available here