The ink is barely dry on the Patient Protection and Affordable Care Act, and already companies are marking down earnings for the first quarter and complaining that a tax provision in the law will force them to cut back on retiree benefits.

The tally of businesses that will take a charge for the current quarter includes AT&T, Caterpillar, Deere and Co., 3M, Honeywell, AK Steel Holding, and Valero Energy, Reuters reports.

The charges are largely the result of a provision in the healthcare law that eliminates a tax deduction for retiree prescription benefit programs, and which may result in companies ditching or limiting such offerings. An AT&T filing quoted in an LA Times article notes that “as a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree healthcare benefits offered by the company.”

An additional tax burden it certainly is, but it’s one with unusually good credentials. The healthcare reform act ensures that companies can no longer deduct federal subsidies for their retiree drug programs.

Yes, you read that right. Companies got subsidies for their retiree coverage, and they could also deduct those subsidies on their tax returns. This is about as messed up as the tax code can get, and worth a do-over for that reason alone. Large employers and their retirees may complain about the cost impact on benefit plans, but they can hardly argue with the law’s intent. ###