The recent news that Caterpillar is taking a $100million dollar charge and AT&T is taking a $1billion charge because of changes in health care does not pertain to the current health care bill, as I understand it. This has to do with the Drug Insurance plan passed under George Bush.

Under that plan, subsidies and tax advantages were introduced to prevent companies like Caterpillar and AT&T from dropping their drug coverage. Those subsidies and tax write-offs are expiring, hence the accounting charges.

The accounting charges are just changes in the way companies have to account for future liabilities. There is no cash involved in the write-downs.

These are one time charges that the stock market regularly ignores in evaluating a company’s worth.

$1 billion sure sounds like a lot of money, but it turns out to be only a small part (0.6%) of AT&T’s market capitalization of $155.34billion.

That would lower AT&Ts stock price by $0.17 of its current $26.30 price if the stock market decided not to ignore one time charges like this.