Columbus
Dispatch...
Harmful
influence
Health-care overhaul casting a pall
over business decision-making
October 4, 2011
President
Barack Obama’s latest jobs
plan ignores the obvious: That part of the reason for the lack of
investment
and job growth in the nation is the uncertainty and disincentives
engendered by
the president’s own policies.
The
Patient Protection and Affordable
Care Act, the health-care overhaul that Obama pushed through Congress
in the
face of widespread and persistent public opposition, requires all
employers
with 50 or more employees to offer health-care benefits to every
full-time
worker or pay a penalty of $2,000 per worker (minus the first 30). This
could
impel employers to avoid hiring additional workers if the new hires
would push
them to the 50-worker threshold, let some workers go in order to drop
below the
threshold, or create more part-time positions rather than full-time
ones.
Employers also would have an incentive to drop coverage, because the
penalty
for doing so is considerably cheaper than the cost of health insurance.
According
to a survey by McKinsey
Quarterly, nearly a third of employers will “definitely or probably”
stop
offering coverage when the mandates kick in. According to the global
management
consulting firm: “ At least 30 percent of employers would gain
economically
from dropping coverage, even if they completely compensated employees
for the
change through other benefit offerings or higher salaries.”
Workers
without employer coverage
would have to seek coverage through health-care exchanges that federal
law
requires each state to set up, using federal subsidies to help pay for
the
coverage — shifting health-care costs from employers to taxpayers.
The
president’s health-care mandates
could be particularly harmful to central Ohio, home of many national
chain
restaurants. This industry operates on such slim profit margins that
the cost
of complying with the mandates could easily outstrip profits.
A
case in point is White Castle, a
90-year-old, family-owned restaurant business based in Columbus. Just
under
half of the 10,000 employees participate in the company’s health-care
plan.
White
Castle is now “giving long
pause” to expansion and hiring decisions pending the start of the
health-care
overhaul in 2014, said Vice-President Jamie Richardson. “It affects
mindset.
... It has slowed the pace of investment. It has slowed the pace of
remodeling
current restaurants and replacing older ones.”
Further,
the act says that if
employers offer health care, it must be “affordable,” imposing a $3,000
penalty
if an employee’s health-insurance premium is greater than 9.5 percent
of his
household income. This could be a problem for restaurants in low-income
neighborhoods, where a health-care premium could more easily exceed the
threshold. Businesses in this situation would have an incentive to move
to
affluent neighborhoods, where household income is likely to be greater,
lowering the odds of incurring penalties. They would have an incentive
to move
out of low-income neighborhoods.
The
Congressional Budget Office
estimates 800,000 jobs could be lost because of the bill. If Obama is
serious
about jobs, he should repeal these onerous employer mandates, said Rep.
Pat
Tiberi, R-Genoa Township. He pointed to White Castle and IHOP, another
central
Ohio business, to illustrate the potential for damage.
Scott
Womack, an Indiana-based IHOP
franchisee expanding to central Ohio, met with Obama administration
officials
on Sept. 15 to press for changes.
“This
will be devastating,” said
Womack, who is building on Hilliard-Rome Road and has opened already in
Reynoldsburg, Lancaster and Chillicothe. His cost for complying with
the
mandate would be nearly twice his per-employee profit, he said.
“We
don’t earn enough money to cover
the legislation,” Womack said, adding that the law needs to be fixed
“so we
don’t have a bunch of empty restaurants.”
Read
it at the Columbus Dispatch
|