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Delta: Obamacare will cost us $100M in 2014

11:12 AM, Aug 23, 2013   |    comments
(Delta Air Lines)
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ATLANTA -- Delta Air Lines expects Obamacare will cost it $100 million in 2014 and warned the law will "provide real challenges for both our company and our employees," according to a letter it sent in June to the Obama Administration.

Radio host Erick Erickson posted the letter online Thursday, saying "numerous" Delta employees called his show in Atlanta Wednesday to let them know the memo had been circulating. On Thursday, Atlanta Business Chronicle reported Atlanta-based United Parcel Service planned to drop 15,000 spouses from its medical plan due to Obamacare. The story went viral and was picked up by Drudge Report.

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According to Delta's letter, the Affordable Care Act is "anything but business as usual." Due to Obamacare regulations, Atlanta-based Delta said it faces $10 million in new reinsurance fees, $14 million to cover employees' children until age 26, $14 million related to the individual mandate provisions and other costs.

"...make no mistake -- the costs imposed on Delta and our employees are very real and they are escalating," the letter reads. "The costs mentioned above, when combined with normal medical inflation and the end of the ERRP program mean that the cost of providing health care to our employees will increase by nearly $100 million next year. Delta will have to absorb the vast majority of that increase in costs so that we continue providing a high value, quality health plan, but some of it will have to be shared with our employees as well. And of course, the balance that the company pays simply means less left over for other investments that make our business stronger."

READ | Full letter from Delta management

FULL COVERAGE | Delta Air Lines

"Like many large companies, Delta faces significantly increased health-care costs in 2014 and beyond," the company told Atlanta Business Chronicle. "Delta will absorb the vast majority of those increased costs so that we can continue providing a high value, high quality health plan. Consistent with our culture, Delta will always keep the best interests of our people in mind in connection with the healthcare and other benefits we provide."

The $100 million in new health-care costs will hurt the carrier and profitability isn't easy to maintain in the airline business. Delta's profit jumped 18 percent to $1 billion in 2012. In the first quarter of 2013, its profit plunged 94 percent to $7 million. Then in the second quarter of 2013 it posted a $685 million profit, improving upon a second-quarter 2012 loss of $168 million.

(Atlanta Business Chronicle)

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