Obamacare Meets Reality. Reality Wins.

Another Adventure In Cargo Cult Economics

By: streiff (Diary) | November 24th, 2012 at 06:01 PM |

RESIZE: AAA

For years the Democrat party has derided the GOP’s view of economics. Our view, essentially, is that your money is yours, not the government’s, and the decisions you make on how to spend it will inevitably be more lucid than anything the government comes up with. The corollary to this is that income redistribution is nothing more or less than theft which characterizes garden variety covetousness as fairness. They call this “trickle down” economics.

The Democrats have their own operating principle: Cargo cult economics. It has many facets but the basis idea is that if the government creates something that is associated with a vibrant middle class then a vibrant middle class will spring from that program as inevitably as Athena sprang from the forehead of Zeus.

Though the term has been around for a while, I first encountered it while riding with a good friend through a dystopic steel town outside Pittsburgh where right in the middle of boarded up store fronts some governmental agency had plopped down an “arts center.” The idea being that somehow funding an arts center in a mostly deserted downtown would revive the downtown area because affluent downtowns all have arts centers.

Over the past months, we’ve chronicled the Obama regime’s slavish devotion to cargo cult economics (here | here | here | here | here | here). Now the slow motion implementation of Obamacare is giving us a rich laboratory for observing cargo cult economics in full flower.

What Obamacare has done is create a series of perverse incentives that encourage businesses to stop providing health insurance. As a business you have the choice of providing a rather gaudy health care plan to your employees or paying a tax. I say gaudy because the the basic requirements of the package, providing enough birth control pills to satisfy Sandra Fluke’s appetites, for instance, adds cost on to the plan. Contrary to what a lot of people seem to believe the health care plan provided by your employer is not YOUR health plan, it is your employer’s.

So by paying a tax, a business can avoid the human resources head ache of managing a health plan and reduce costs. What option do you think many businesses will choose.

But wait there is more.

An employer only has to provide a health plan for full time employees. There is no penalty for not providing health coverage to part-time workers. And there are no penalties if you employ fewer than 50 persons (by person I mean full-time equivalents: if you have part time workers and your average number of hours worked exceed 50 x 120 (4 weeks x 30hr/week). You can read more on the nuances of calculating what is a full time equivalent worker courtesy of RedState member jayp.

Faced with the prospect of paying as much as $40,000/year some employers are reducing both full time positions and total number of employees.

Companies as diverse as Papa John’s, St Jude’s Hospital, and Murray Energy have all announced layoffs that are linked to Obamacare.

What Obamacare has done in the name of providing universal health care is to make it advantageous to employers to provide no health care whatsoever. This isn’t necessarily bad, in my view one of the major shortfalls of our current system is that the policy is owned by the employer rather than the employee, but what is bad is when such a sea change occurs when the actual operational concept was to expand the scope of coverage provided by employers.

By gold plating the minimum policy, employers are encouraged to carry no policy at all. To avoid the fines associated with not providing coverage employers have an incentive to reduce a vast majority of employees to working less than 30 hours per week. If you are a waiter, your employer now has an incentive to reduce your tip income to avoid health care costs:

Bob McAdam, Spokesperson for Darden, parent company of Olive Garden and Red Lobster restaurants, stated that they were still in a test stage back in October. The company had made plans to reduce hours and require tip-sharing from waitstaff to the remainder of employees, which would eliminate the owners from having to provide tip-credit*. (*A set hourly pay amount for waitstaff established by the local government and is divided into two parts. If the waiter doesn’t earn tips then they receive the whole amount of both parts. If the waiter does receive tips then they only receive half of the hourly amount.)

On the subject of employers wanting to reduce the incomes of waitstaff for his own benefit, it certainly isn’t going to encourage staff members to purchase food at his restaurant.

One issue that concerns career waiters is that they choose the field because they can earn up to $200 per day in tips, having to share their income with remaining employees reduces their own income.

When is a waiter responsible for paying for the wages of his co-workers? For that matter why is the paying consumer responsible for paying for the wages of a business above and beyond the price of his meal? The tip has always been a gratuity, a thank you, an appreciation, not meant as a subsidy for business owners to underpay their employees.

Since the government assumes that the waiter is earning at least 8 percent in tips figured on his gross sales for the day; reporting less could trigger audits.

In the view of Obama and his minions companies are in business to provide free stuff to their employees (so his view on economics parallels his view on governance) and since a vibrant middle class has health care provided by their employer if the government merely mandated this to happen we would suddenly be prosperous.

Now the demographic Obamacare sought to help is finding itself not only without health coverage, it is also required to work two jobs to make ends meet. Well played, President Obama.

COMMENTS

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jayjayson

Just think, in a few days/weeks/months/ or even years, the only people with employer paid health care will be government employees and those working for companies with less then 50 employees. To give prospective on the cost already, I work for the govenment, it cost me $4800 per year for health insuance. As of Jan 1st, I will owe in taxes and additional $960 per year to the Feds. I am only making $22K a year working ofr the governemnt. I work 3 jobs, for close to 60 hours a week, plus am involved in 3 other oganizations that work in the community. My wife, the bread winner, has been out of work for 6 months. So a family of 4 living on less then 33K a year. Since June I have been working to get a few things up an running which would change the equation. However since the election, those companies have pulled back. Two part time jobs that could have neted up to $50K a year are gone. Why? Because both companies would be over the part time employee number, or the hours we work could be more then 30 for 4 weeks, but next to nothing for the next 4. Just an added prospective.
brah

This was always the plan. Have businesses move people from private to government insurance and expand Medicaid, a backdoor to universal healthcare. Those that keep private health insurance will be deemed to have Cadillac plans which will be taxed into non-existence. The Independent Advisory Board will cut physician reimbursements and soon we will be admiring Michael Moore’s Cuban healthcare system.
DerKrieger

Does Disqus ever work right? Jeez!
jerseygalnny

Could be your browser?
brah

Those that are dropped by their employers will be swept up in a massive expansion of Medicaid. Their plan all along clearly was to make employers drop their healthcare coverage. They will then control healthcare decisions through physician reimbursement cuts with the IPAB. It is the backdoor to Hillarycare.
streiff

do me a favor read the whole story
DerKrieger

iPad.
brah

you are naive if you don’t think that employers dropping healthcare coverage was Obama’s plan all along. Yes, from his perspective, it was “well played”.
jerseygalnny

old-fashioned desktop run by a technodummie here…
streiff

stop your spam commenting. You are attempting a threadjack and it isn’t going to turn out well for you.

You obviously aren’t interested in discussing this story. Either post your own diary or move on. Or I move you on.
brah

I’ve been here since nearly the beginning of this site and this is all you ever have. I agree with your story with the exception that Obama’s plan always was to get employer’s to drop healthcare coverage. If that is threadjacking and you want to move me along, so long.
Bill S

It mildly sucks on the iPad (which I use the majority of the time also). The biggest problem is its failure to scroll to specific comments accurately….but that’s far from all.

Disqus is a POS. I’m hoping we come up with something better. It’s as miserable of a failure as a commenting engine as Obama is as a president.
streiff

just to reiterate, I think your strawman was very cute and he burned very bright. But that is not what I wrote about and it pisses me off to no end that you not only don’t have the common freakin courtesy to comment on the story… or equally satisfying to me would be to ignore it… but you contrive some “exception” which I don’t even address.
Kyle-MI

Slight correction. You said, “The statist has done a great job over the decades, indoctrinating a
majority that they are entitled to stuff from the government.” It should be “The statist has done a great job over the decades, indoctrinating a majority that they are entitled to stuff from their employer as forced by the government.” They think it is free stuff but you cannot fool accounting. Everything has to be paid for. Every employee has to earn enough for the company to make all they are being paid for (salary and benefits) worth while.
carolina

“Now the demographic Obamacare sought to help is finding itself not only
without health coverage, it is also required to work two jobs to make
ends meet.”
The hubris of govt slugs makes my blood boil. The ‘one size fits all and covers all’ is a complete waste of resources. Young people will be charged overly high premiums because the law says that older people can’t be charged premiums above 3X of younger people. No caps on annual and lifetime use creates unlimited exposure for the insurance companies. How do they price unlimited liability? That creates a big increase in premiums right off of the bat. I could go on and on ….
Of course employers will do anything they can to reduce costs to their business – including reducing employees and using contractors. I expect a boom in contract employees (who have to provide their own healthcare). Just watch….. Full time permanent employees will go the way of the dodo bird. (this was already happening in some industries because of benefit costs) Use of contract employees is going to explode.
hnordquist_

I have read that the calculation of penalties also includes part-time employees. Did I miss something? Basically, they count up the FTEs, then apply the math to any additional people in the exchanges based on their percentage of full-time hours.
streiff

I explain this in the story and provide two links on the subject.
hnordquist_

‘(2) FULL-TIME EQUIVALENT EMPLOYEES-
Found it in the bill.

‘(A) IN GENERAL- The term ‘full-time equivalent employees’ means a number of employees equal to the number determined by dividing–

‘(i) the total number of hours of service for which wages were paid by the employer to employees during the taxable year, by

‘(ii) 2,080.

Such number shall be rounded to the next lowest whole number if not otherwise a whole number.

‘(B) EXCESS HOURS NOT COUNTED- If an employee works in excess of 2,080 hours of service during any taxable year, such excess shall not be taken into account under subparagraph (A).

‘(C) HOURS OF SERVICE- The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.
hnordquist_

‘(2) FULL-TIME EQUIVALENT EMPLOYEES-
Yes, this is in the bill.
‘(A) IN GENERAL- The term ‘full-time equivalent employees’ means a number of employees equal to the number determined by dividing–

‘(i) the total number of hours of service for which wages were paid by the employer to employees during the taxable year, by

‘(ii) 2,080.

Such number shall be rounded to the next lowest whole number if not otherwise a whole number.

‘(B) EXCESS HOURS NOT COUNTED- If an employee works in excess of 2,080 hours of service during any taxable year, such excess shall not be taken into account under subparagraph (A).

‘(C) HOURS OF SERVICE- The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.
hnordquist_

Yes, I see it. Thanks.
DerKrieger

Haha! Nice!
gunnyg2002

The law of unintended consequences is raising its ugly head again and usually does, when Democrats pass laws that the rest of us have to follow.
garfieldjl

streiff, brah’s argument may not be a strawman, there may actually be something there.
When you consider all these items in place to make sure that part-timers are counted, the regulatory mess, coupled with the initial push for government run healthcare, etc. I honestly do have a similar suspicion that it may be deliberate, I don’t think there is enough out there yet to say that it was deliberate with certainty, but there is enough there that one must acknowledge the fact there may be something to that allegation.
I know you guys are worried about being painted as nutty by the left wing media, but I honestly think there comes a point when the assumption of this mess being the result of just plain incompetitence starts starts to look rather implausible.
Fact of the matter is that there have been others that have voiced a suspicion that it is deliberate, including Rush Limbaugh, I think Mark Levin may also have similar suspicions.
rbdwiggins

Well, the historical average of liberal/progressive policy remains intact.

The Law of Unintended Consequences rears its ugly head, repeatedly smites those that voted the Democrats into office, sticks the public with an enormous bill that comes in at least three times the original estimate, and if the American people are really lucky, the policy doesn’t destroy the American family in the process.

In this case, the greatest health care system in the world might not be so lucky. It certainly won’t escape unscathed.
streiff

I am not arguing with his argument. I actually agree with it. But the story is NOT about what the regime intended to happen. It is about something entirely different;
garfieldjl

Fair enough.
greyeagle

The hospitals here in Florida have announced layoffs along with other businesses.
http://historeo.com wtbrewer

There is huge irony in the unintended effects of ObamaCare. Consider the following quote:

“Employers began offering health insurance as an employee benefit during the 1940’s, when wage controls limited pay and employers sought to compete for scarce workers, marking the beginning of the trend toward employment-based health insurance coverage for workers.” (“Health Insurance in the Small Business Market: Availability, Coverage, and the Effect of Tax Incentives” by Quantria Strategies, LLC, Cheverly, MD, for SBA Office of Advocacy, released Sep 2011.)

As Streiff’s article indicates, ObamaCare has begun and looks likely to eliminate employment-based health insurance altogether.

The irony here is that it was the unintended consequences of government intervention into the marketplace that led to the association of employment with healthcare and it will also be unintended consequences of government intervention that will eventually sever that association.

billb
http://historeo.com/web/?p=1706
anonymouscitizen

As for sick leave read the other day that in Portland OR some people are trying to get the City of Portland to mandate that all employers in the city offer sick leave/private time off for all employees.
jaykali

I hear and read a lot that companies will just pay a fine instead of providing health insurance for their employees. That is only the case some of the time. Clearly, many white collar jobs come with company provided insurance. If things get crazy expensive then employees might lose their insurance, but in general companies will try to continue providing insurance for those employees. The supposed point of the law was to force coverage for low wage workers. That’s where things get interesting. Some companies provide high deductible or some other form of low cost insurance. Those companies will have an incentive to drop coverage. Some will reduce hours, some will reduce employees. Some will pay fines. I will be interested to see what big company that has a large staff of low wage workers could ACTUALLY provide Obamacare-approved insurance when they weren’t providing any before. I mean wasn’t that the whole point? And could such a company survive competitively? Are there any companies out there that are going to willingly eat this new mandate? I think that would be hard to believe. Can Pizza Hut pay for insurance if papa johns is attempting to avoid it? To me the real purpose of the law is to get a bunch of people on the government dole. We already know ab the Medicaid expansion. There will also be a lot of us subsidized enrollees as well. That to me is the point of all this.
lineholder

That isn’t limited to Florida, greyeagle. One of the larger health care orgs here in NC announced that it will be laying off 950 employees by June of next year. Other announcements of health care orgs/facilities following suit can be seen at this site.
http://www.dailyjobcuts.com/

Evaluating Obamacare in the context of consequences gets tricky. When it comes to finding solutions to the problems that existed in the realm of health care…a Hyundai might have gotten us where we wanted to go but the Dems purchased a Bentley instead. Very costly to operate and maintain. They were little less than zealots in passing the legislation when they did (in the middle of a recession) and in the way that they did (considering all the many provisions that have been incorporated into the scope of the law since the time it passed). Some consequences were intended whereas others…not so much.

The healthcare industry employs over 10% of the population in our country. We’ll just have to watch and see how this unfolds, but from what I’m reading in difficult, we’re just getting started. Obamacare is changing the delivery model of health care. Just not necessarily in the way that the Dems intended.
lineholder

Full-time workers, yes. That is required under the law. Part-time employees and seasonal employees are a different matter.

Here’s another example of how part-time and seasonal employees are impacted by the law…just education industry rather than restaurant industry.
http://www.breitbart.com/Big-Government/2012/11/21/Surprise-PA-College-Slashes-Hours-To-Avoid-Obamacare
major

Did you really expect anything different?
It is meant to destroy!
CarolT

When Romneycare started here in July 2007, the company I work for had to have each FT employee who waives insurance to fill out a form and sign it. The cut off is 30 hours per week. I also had to do reporting every quarter of how many employees we had, how many hours each person worked and if they were covered under our plan. It is a very dull boring task. Now they’ve reduced it to reporting only the first fiscal quarter from September to December of each year.
I can only imagine what the reporting requirements will be with Obamacare!
I don’t think the man who signed Romneycare in MA should have been our GOP nominee. I supported him once he was but I had my doubts but hoped for the best.
major

Is there any reason why we have conjured up a reason to NEED health insurance in the first place, big freaking government? TELL ME!
Get out of the way, remove ALL gov. dependent plans and bring all prices way, way down! Snazzy wall graphics and environmentally artistic hallways cost how much that could be put where, for patient health instead?
Oh, never mind.
Union workers need work!
CarolT

Please come up with something better than Disqus I like to use my iPad too but find trouble with it here. I use my laptop to read and post here. Thank you, please keep looking.
lineholder

Carol, the reporting requirements are massive. Layer upon layer of regs, each with their own reporting requirements, many in the form of performance measures.

BTW, what do you folks in Mass think about Deval’s new law?
http://www.forbes.com/sites/sallypipes/2012/08/20/gov-deval-patricks-new-health-law-is-flat-out-dangerous/
americanmale

Of course Brah is right. Having said that though…you said,

“So by paying a tax, a business can avoid the human resources head ache of managing a health plan and reduce costs. What option do you think many businesses will choose.”

Actually, since the tax is a penalty, many businesses will try to comply. The reason being that a penalty ups the chances for audit…particularly if businesses opt to pay penalties on “many” employees.

Audits are expensive…They involve accountants, ungodly manhours servicing audit requests, nerves, and of course, most always leads to other things….like penalties for taking deferred income when the IRS doesn’t believe it should be deferred, or taking charges on special items that the irs might not find so special.

And no, businesses can’t lay off workers, or reduce hours for that manner. All that has already occured in 2008/2009. There is no more “fat” to trim.

We still need to be in business….and get things done. Every non fortune 1000 private enterprise employee working today has a value that can’t easily be replaced.

Healthcare is nothing compared to the training costs of new skilled employees. It really takes a year or so just to get newbies (part time or full time) going at full productivity. This law has us in a 20 percent upcharge bind.

No, what we’ll do instead is raise prices (inflate), We’ll try to comply because we don’t want the idiot government to get involved in our private enterprise, and of course, when we can’t afford the mandates, we’ll lay people off….and become stagnant and marginally maintainable…..and basically just not give a crap anymore.
commonsenseobserver

So what do we have to offer those who are hurt by Obamacare, including the uninsured themselves? What kind of society does the Republican Party have in mind, and what specific policy initiatives does it have to achieve it.
Ann_W

Why would you be able to more now? The small steps that have already been taken to implement Obamacare has already shot the price of healthcare up dramatically.
Ann_W

Connecticut already did this. … And the jobs just keep leaving.
trueamerican2008

Obamacare is only about forcing the USA to a single-payer, government-run healthcare system. What better way to have power and control over the country and it’s citizens?
streiff

You are simply wrong. Your assertion does not override the evidence. The links provided identify dozens of companies that have elected to reduce their work force or convert a substantial number of full time employees to part time status.

I really doesn’t take a year for a new employee to become productive. That is simply wrong. In lower skill industries, like the restaurant business which is being the most aggressive in conversion of employees to part time, a new staff member will be fully productive in a matter of days. I really question what possible business you could be in that requires a year on the job for a new staffer to become productive. I have worked in senior management positions in the military, government, and private sector and I’m calling BS.

Audits are a way of life and those costs are baked into your overhead. No company is going to pay about $1,000 per month per employee plus the ancillary costs of administering it when they can point their employees towards an exchange and be done with it.
streiff

that is a nice bit of trivia. Thanks. You may see this again soon.
streiff

the high deductible policies are now illegal
streiff

Papa John’s, though, is one of the firms mentioned in the article quoted that is converting full time employees to part time employees.
Pingback: Obamacare Meets Reality. Reality Wins.
SoFiMil

I actually don’t agree. But that, as they say, is a diary for another day. As to the diary – most definitely another example of foreseen but unintended consequences.

We told ya’ so!
gscandlen

The really fun thing about ObamaCare is that it will result in FEWER, not more, people with health insurance. Yes, employers will drop coverage in droves and then people will be forced into clunky incompetent Exchanges. But the Exchange will have to enroll them at any time for any reason, so they will wait until they really need services to enroll. After that, they will drop out again. The tax penalty for non-enrollment is small and will apply to almost nobody. Ditto with the Medicaid expansion. One-third of the uninsured are already eligible for Medicaid but don’t feel a need to sign up.
streiff

the real fun fact is that without near universal employer support, either through providing coverage or paying penalties, the costs on this will absolutely skyrocket as most people are forced into an exchange. This is going to increase out of pocket expenses of those individuals least able to afford them.
DerKrieger

Not yet. We just did our annual benefits enrollment and I signed up, again, or my high deductible plan with an HSA.
dpmaine

> , but what is bad is when such a sea change occurs when the actual
operational

> concept was to expand the scope of coverage provided by
employers.

I think this is where the piece breaks down. The stated goal was to increase coverage, not just by employers. Hence the Medicare expansion, and the regulated exchanges – both of which are designed to provide to get people away from employer based coverage (and into the arms of government).
dpmaine

If nothing changes, those people will be subsidized and the formula covers a maximum out of pocket that is based on your income.

The problem for conservatives is that a lot of people are going to be getting big transfer payments to pay for private health insurance. It’s going to be a bonaza for insurers and the taker class.
dpmaine

Yup – adverse selection bias, here we come.

One of the little dirty assumptions is that the “teaser” penalities in the current law will have to be increased to make them hurt enough to keep people insured. And then they’ll need a system to notify the IRS when you drop coverage, so they can force you to re-enroll. Some states have systems like that with auto insurance, like if you drop your required insurance your registration gets automatically pulled within 5 days or something. It’s disaster to go through if they ever make a mistake, you can very easily end up in jail.
dpmaine

This is a super dangerous path. Their are a lot of people going to be getting very large “Checks” (tax credits) for buying health insurance. Up to 80% of the cost of the a family policy (so, in the range of $8000/year, inflation indexed).

The taker class will line up at 4AM to take something for free, in the rain, in the snow, under a bridge.

As soon as people get something for next to nothing, a lot of the little problems will melt away in their minds.
btpull

Yes, of course Economics 101 if something is made more expensive there will be less demand for it. People are no different then machines, electricity, gasoline, etc.

Reclassifying worker status and layoff’s of the low skilled/low wage workers is just one aspect. Companies have not been and will continue not to hire. The very large company I work for does not even hire for replacement. When someone leaves it is simply one less head that will need to be given severance during the annual re-org.

The long term affects, which is Obama’s true legacy, will be higher long term unemployment, erosion of real pay, and the erosion of the standard of living for the middle class. Of course the dumb democrats will counter with “living wages” laws, redefinition of a full-time worker, etc, which all will lead us into a downward spiral.
searcher0

deny’s has added an obamacare surcharge to the bill.
skorrent1

You will not be offered “some kind of coverage”. You will be obliged to carry a gold-plated policy, and some bureaucrat will decide if you can “afford” it, or if the taxpayers will pick up part of the tab.
earlgrey

I am speechless. I have no idea what to do with this information. I typically absorb it and pass it on and APPROPRIATE opportunities, but this all falls on deaf ears. People really believe all the PR propaganda they used to pass this. Obama is the messiah and Obamacare is his miracle. No one can even accept the slightest negative impact. The reality there is an upside and downside to EVERYTHING, but liberals are not willing to accept that there is ever any downside to their ideas (they use republicans as a convenient stooge to write off the failures of their programs).

I hope Streiff continues to monitor this, but more than that I hope we can find an audience that is willing to listen.
btpull

Understood, but in this case we are talking about labor. Low skilled labor, even professional labor, has a very elastic demand and can relatively easily be replaced by a machine or re-engineering a work process.
johnms

The elimination of employer health benefits may turn out to be a good thing in the long run. Health insurance is the only insurance that you lose when you lose your job. If you change jobs, you don’t have to change your homeowners insurance, your auto insurance or any other insurance except for your health insurance. Furthermore, the structure of employer-provided health insurance conceals the real cost of health insurance by having your employer “pick up” half or more of the cost — which really amounts to part of your paycheck that you never see.

A far better system would be where individuals buy health insurance from nationwide insurance companies from the same insurance brokers that they buy their home and auto insurance from. They would have a wide spectrum of choices. Insurance companies would be unable to conceal the true costs of their products behind “employer contributiions”, and being responsible for the full cost of their insurance, workers would choose plans more in line with their actual earnings. Their health insurance would stay with them as they changed jobs and they would be better able to stay insured during periods of unemployment or underemployment.

Ironically, Obamacare might be the catalyst that forces the dissolution of employer-based health care. Progressives think that this is a one-way street towards single-payer, but the opposite may be the case. Once everyone is buying insurance from private insurance companies through cumbersome, expensive and maddening government exchanges, the most logical way to streamline the process would be to simply abolish the exchanges and let individuals purchase insurance directly from the insurance companies. The trick will be in finding ways to make the scenario play out this way.
dsmurf

Obamacare expands the taker class, minimizes encentives to work more at certain thresholds, trying to read an article on it makes my head hurt cause I can’t remember all the ins and outs of it all.
I hear a new rule will go to tax tobacco users, generally low income people, imagine headache of verifying a tobacco user for everyone in order to avoid the surtax. How will it handle once in a while premium cigar smokers?, taker and producers alike may get hung up on this recent development.
clowngirl

Great point skorrent1! There is undeniably a market for relatively inexpensive, high deductible “catastrophic” coverage- for people who are basically healthy, fine with paying out of pocket for the medical care they are likely to need, and don’t want to waste a lot of extra money on health “insurance”- such a thing was unavailable in many states even before Obamacare- now it will be abolished altogether.

It’s worth remembering that the individual mandate was always the least popular aspect of Obamacare— even among people who like the idea of Obamacare in general– presumably that subgroup has taken comfort in the idea that all employers will now be forced to provide healthcare… It will be interesting to see how things play out when that segment is disillusioned with (as Strieff explains) consequences so different from what they imagined.
dianabug

streiff – I own a very small service business – 17 employees (full time) and we have route work – 1 person per truck – no way to “cut back” here. I realize they keep saying this won’t apply to my company, but in a lot of ways it will. I have offered insurance for years for my employees and only 5 have consistently signed up. We started off with an HMO and are now in an HSA, but I understand they are regulating the HSA’s out of existence. So we will be forced to find another plan AND this year 12 of my employees have decided to go with the insurance we offer – more cost for my company. Why are they signing up? Because they know they will be forced to soon, so they decided to bite the bullet now.
When I was young (40 years ago) insurance was something you bought on your own, if you wanted to – I wish it was that way now, for that matter I wish a lot of things were they way they were 40 years ago.
I don’t know anything about you, but I can tell you that there are many business owners who really do try to do the right thing for their employees, and in doing so, our “profit” is extremely low – like less than 5% on a regular basis. So Audits really aren’t baked into my overhead and not something I would ever want to endure. I agree with Americanmale and know that even in our business it takes several months for people to learn all the things they need to know to be fully productive.
dianabug

Well, if companies Don’t provide the insurance, then they get stuck with the fine.
Right now, we have to pay 1/2 of the Employee Only cost of the plan we provide – it occurs to me – if my employees are “low income”, and mine are, and they are going to get incentives for having insurance, then that should really come out to be free for them, or more than free, if I’m paying 1/2 of the EO already.
As far as being competitive, we are ALL going to pay something, either the ins. or the fine.
dianabug

We are still being offered them, by our agent.
jpkoch

People should understand the power the President and Congress gave HHS. We live within a system of dictatorial powers. Either the President will issue an executive order changing the labor hour requirements or HHS will do it for him.
Another loophole is the 50 employee threshold. Many small businesses will either lay-off the necessrary employees or hire contract workers to remain below the 50 man limit.
jpkoch

I agree that in the short run it will be a bonanza. But, in the long run there will be not enough revenue coming in. And many people are assuming that the GDP will remain in positive territory. If we go into recession all bets are off.
septembergurl

I think you mean Medicaid expansion, not “Medicare expansion”. Medicaid would be used to pay for insurance for people who can’t pay for it.

Medicare is being systematically looted to pay for Obamacare. Some of that $714 billion that Ryan talked about was used to keep geezers on Medicare Advantage this year through the election. I believe the geezers saw through it.
CarolT

line holder – I would say 50 to 60% of the people in this state have no clue about the new law. It was co-sponsored by a republican, if you can believe that, Bradley Jones? I say it stinks, even the WSJ wrote about it. Deval is hoping Obama will pick Kerry as Secretary of Defense, and will have them change the law back to gubernatorial appointment and step down from being governor and Lt Governor will be governor and appoint Deval as senator. They change the laws back and forth depending on if the governor is R or D.

Medicare Part D also made more work for me to do.

I am not looking forward to Obamacare requirements. I think that if Obama etc think it is so great, they should join it and get off the gold plated plan we provide for them.

Actually none of them fit the full time employee laws, they are always on vacation, supposed to be spending time with their constituents but they are not, at least here in MA.

This state sucks, I know Brown was a RINO but he’s better than Warren will be. Scott should have run as a conservative and w/o the likes of McCain, Christie and other RINO’s campaigning with him. He had virtually no chance, at least he should have tried something new here, conservatism.
CarolT

I hope it says Obamacare surcharge on the bill, and it’s not hidden in the costs.
americanmale

I understand your premise that “Obamacare” is an anti-jobs strategy i.e. one that results in job loss, but in reality, that just isn’t so.

Rather, Obamacare has an inflationary cause-effect on the forefront with an ultimate goal of achieving government single payer healthcare.

It is not “simply wrong” that employees require a year to become productive.

Master electricians have to have years of work experience and demonstrate aptitude for licensing. Master plumbers have to have years of experience and demonstrate aptitude.

Master carpenters have to have years of experience. For example, look at the wall in front of you. Odds are, the subcontractors that hung that sheetrock you’re staring at had to have years of experience otherwise, their small business wouldn’t get the job from the GC in the first place.

Do you talk on your cellphone? Well, odds are that a small company of about 7 or 8 guys installed the antenna that you are communicating with.

Are you using a desktop computer in a government office. Well, the company that installed the wiring had to have licensed telecommunicatins engineers on staff with years of experience otherwise, they couldn’t even bid for the work.

And clearly, you’ve never bid a government contract. Ever see the experience requirements that comprise those manpower positions?

The point is, no company is going to lay off their workers because of healthcare. They need the experienced staff in order to continue to do business. THERE IS NO MORE EMPLOYEE FAT TO TRIM. Thus, they’ll raise prices (inflate).

And finally, as for the question of what business i am in…(ie the peeing contest of credibility for arguments sake) well, I don’t want to go down that path as that becomes personal in nature which is against the spirit of discussion redstate as always provided. I can if pressed though. Remember, however, that we are ultimately all on the same side.
streiff

From this it is pretty clear you don’t know what you are talking about, Virtually nothing you said here is either true, or when it is true it isn’t germane. I guarantee you I know a helluva lot more about government contracting, from both sides competing for and evaluating proposals, than you do in your ratty little travel agency. Real companies hire people to meet qualifications all the time. And they had better his the ground running.

It is equally obvious that you really don’t know what “inflationary cause-effect” is.

But as Mark Twain said, never argue with idiots, they just drag you down to their level and beat you with their experience.
clowngirl

Does anyone know the details of the formula? I would imagine the definition of “afford” will become something like ” if you’re willing to forgo saving money and/ or any discretionary spending” or “if you can still pay all your bills plus Obamacare and not be then totally strapped with the help of one or more credit cards”
separatewayz

https://www.facebook.com/ConsentOfTheGoverned
kycon

If anyone thinks that businesses won’t go the route of dropping their coverage because it’s cheaper, think again. Remember what Samuel Gompers said: “The worst crime against working people is a company which fails to operate at a profit.”

Business owners have one goal in mind: make money,. They’ll take the path that allows them to get the most return on their investment in most cases. If that means that they need to postpone expansion to keep the company under 50 employees, it’ll happen. If they need to reduce hours, they will.

Many people think of businesses as places that are required to hire people, or that are required to provide certain things. Businesses provide those things in order to compete for the workers they need to be successful. This is how employer-provided health insurance got started back in the 40′s.

Amusingly enough, Obamacare may alleviate the need for employer-provided insurance. It certainly makes paying the penalty more attractive than the cost of the plan that’s required, and more importantly, there will be a large pool of newly unemployed workers who get laid off to reconcile the balance sheets of the companies they work for now. Large numbers of potential workers = fewer available jobs = an employer’s market, where people won’t be picky about benefits, they’ll just want to work.
larenzo

Lay down with dogs you get fleas.
funwithknives

“At Least” and “Maybe” are not any kind of economic sureity that I am
aware of. “Maybe” you know something that I [and possibly We] do not and it would be nice iffin’ you clued us in on it.
Wishing, dreaming and hoping for Better Days with Barry’s Guys is not going to end up with you in a measurably better place.
You claim that you don’t think O-Care is going to change ‘anything’?
There are countless Orgs. and numerous Sites to school you, you poor unfortunate naif. It is plain you have not availed yourself to information that Would Change your feeble little tune.
You see, there is this thing called a “Search Engine”. You type in ‘what’ you are interested in and Millions of Facts just come rolling out……
You got this far, take another Giant Step…..Maybe, you will, someday…..
Marcus_Traianus

Stretching my memory- but I seem to remember an analysis indicating that PPACA/Obamacare would;
- Stifle job creation/create layoffs
- Negatively affect employee pay/benefit packages

- Cause some companies to drop coverage for currently covered employees
- Raise the overall cost to businesses

That does not even include the part about a huge cost transfer to the government which will need to be paid for with new taxes and eventually raises the overall cost of health-care, while decreasing quality for the nation.

I believe that analysis was called partisan, “Right-Wing” or something like that. Just curious- where are the people who characterized this as such?

So with that in mind and armed with the real examples you so artfully articulated, I suppose any day now the House leadership will make this part of the debt negotiations? You know, since it creates huge unfunded liabilities for the future, is negatively affecting the economy and people hate it. Press conference maybe? Oh wait, it’s “the law of the land” which I guess is code for surrender.

This law is a economic turkey and we should hang the disastrous consequences around the authors and supporters necks like a giant albatross. Where I come from that’s called a complete strategy- make them own it.

Instead our “leadership” will preen itself and focus on amnesty, providing more “stuff” to the 47% or some other Jindal-esque proposal.
edintexas

Apparently you are assuming that the Administration will somehow manage to establish Exchanges in those states which refuse to establish them, and also that the Administration will somehow manage to expand Medicaid without the cooperation and partnership of the states where such cooperation and partnership are refused.

Another real fun fact is that the Medicaid expansion is only fully funded by the Feds for startup, with the continuing cost increase to be born by the state’s taxpayers. I’m unsure whether the continuing cost would be born fully by the state, or would fall into the usual Federal-State cost sharing formula for each state, but either way there would be additional cost for the state’s taxpayers.
http://conservativemormonmom.blogspot.com ew88

I wish that the GOP would have sent this message out articulately ahead of 2012. The consequences have been well known for quite some time, and all we need to do is teach people using their own experiences. Like, “what would you choose to do, for example, pay a $10 tax or pay for a $100 health plan for employees? Or cut those employees hours to avoid both the tax and the health plans? Of course Obamacare is going to cost American jobs!” I’m tired of the GOP’s obtuseness. Surely they can reach past the media bias and talk to Americans more effectively than they are. Meanwhile, everyday conservatives must pick up the slack or we’ll have no hope of any consersative president in the future.
www.conservativemormonmom.blogspot.com
http://conservativemormonmom.blogspot.com ew88

Those of us connected to the health care industry have known for a long while that the entire PURPOSE of Obamacare is to drive insurance companies out of business, leaving only state care. Scary thought, but it will happen more quickly than you’d like to think.
robobbob

I am a licensed contractor. and yes, we hire ready to go workers all of the time. BUT I can tell you that it takes years of experience to create a useful employee. A fresh off the street entry level person is useful for little more than gofor duties. You can SAVE money by having them do menial tasks instead of using the more experienced, and expensive, employees, but you don’t actually start MAKING money from them until they have several years experience.

Part of what makes new people useful is their lower pay, including lack of benefits during their probation period. This law seriously degrades the attractiveness of entry level employees

O-care just adds yet anything complicated variable to an already ugly situation. and yes, I’ve watched the video of BHO promising to implement gov healthcare, but apologizing it will take a long time. the reduced hours, reduced hiring, and anti-small business obstacles are just collateral damage on the road O promised his followers. O-care is the gateway to that road.
edintexas

Oh, so all those ENL (English as No Language) construction workers around these parts gained their years of experience in another country? And that applies to utility company work too. In both these situations I have experienced, the contractor/sub-contractor sending a crew out with one foreman who almost speaks English well enough to fully communicate with the customer. To be honest, I have no complaint with the quality of work done. But I don’t believe these workers have the years of experience you apparently believe is a requisite for quality work. But perhaps you reside in a state where the trade unions control who “qualifies”.
fightnright

that’s what it seems to me and mr ‘right already. We’ve taken care to cut expenses over the years, deny ourselves excess, and save every penny for a just-adequate retirement nest egg.

Everyone we’ve spoken to about future benefits seems to think that we won’t gain anything under ACA until all our savings are completely depleted. Medicare will be further cut back, and to boot we will have to kick in additional taxes to help provide coverage for the taker class. And already, our individual health insurance – which we’ve been painfully keeping up for so long – has doubled since O’Care has required insurance companies to take on people who wait till they’re ill to buy insurance.

So much much for those who have acted responsibly, depended on only themselves, and put aside funds for a rainy day…..
givemefreedom

Successful businesses will find economy in ideas that avoid the regulation of Obamacare, they HAVE TO to remain successful and they will.

But don’t worry. As the liberal progressive democrat machine observes that Obamacare is being sidestepped, they’ll change the rules of the game and punish those clever enough to avoid the first round of making them pay. Obamacare IS after all . . . . a TAX. The Supreme Court said so.
septembergurl

The Supreme Court has ordered the appeals court in Richmond (I think) to hear the case brought by Liberty University on religious freedom grounds. This might end up in the SC, which is Liberty’s goal. So Roberts gets a do-over?
macaroniandcheese

we don’t have the “best” we have one of the better. I for one am glad of the intended/unintended consequence of the death of Employer based health care.
macaroniandcheese

Then it is fortunate that all these contract employees will be able to buy their OWN health insurance. With their OWN preferences, with their OWN choices about their OWN needs, instead of some religious institution deciding what coverage they get regardless of the employees own belief
Repair_Man_Jack

Fry the spam!
caustic1

You also get use of the roads and bridges we help pay for as well as the police sheriffs and national defense that keeps you your family and business safe ,it’s typical of conservatives simplify complex social and economist problems after all most of their devotees are elderly or simpiltons.The last election spoke to what the majority thinks of republican economic policy and it’s vision for the future…..roundly rejected.You should change the name of your party to “the great alienators”.
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gizmo

So then the “MassIntelligentisa” in power raises the minimum wage to be “fair”, puts price-control on pricing ($1 menu at McD’s?!?!?) etc….
Finrod

I imagine it’s going to be more like ‘when we go (back) into recession’.
Finrod

You should go to places like dKos where your inane drivel is appreciated. Who’s the idiot here? You.
Finrod

Take your anti-religion bigotry and shove it. And if you think there will actually be choices for those contract employees instead of having to deal with the government exchanges, well then, you just outed yourself as an Obama voter idiot.
Finrod

Yes it is a very dangerous path, but it’s what people voted for. Elections have consequences.
streiff

that was a quick commenting career. Talk about simpletons.
Melody Warbington

A friend of mine owns a small business with about 100 employees. It doesn’t offer health insurance benefits to most of those employees for various reasons and is already struggling to make ends meet in this economy. They’ve calculated they will have to pay $140,000 in penalties rather than offer health insurance which would be much more expensive. That is $140K they don’t have, so Obamacare could very well put them out of business. Then those employees will not only not have health insurance, they won’t have a job. That’s change for you.
sglaw

You are exactly right.
runner12

This is…well..interesting to say the least. The SCOTUS actually vacated a lower courts’ ruling in order to hear the case. Could O Care go down on these merits? Not sure. But the Catholic Church and other faith-based organizations may be doing a happy dance soon.
perdido

Exactly.
Employees already should be formulating their approaches to their employers to go ‘contract’. Once they do this they can disavow the entire income tax collection system using the language of the IRC.
This latest scam has the potential to bring the entire Income Tax Hoax to a halt.
perdido

Right. Then, a smart employer will add a “health insurance” benefit to his hiring program…
The solution has been at hand for a long time. Stop the States from interfering in the market by mandating certain covered liabilities and restricting certain providers from competing in those States.

The unfettered free market, in this case most assuredly, is the (only) answer.
4free

Not any more. It was dropped in a few days due to over whelming
customer complaints. Hey, business is business.
mogul264

So, as I perceive it, most workers will probably be getting LESS than full time employment, and be forced to seek other jobs, which will ALSO be less than full time employment. Therefore, they, and their families’ healthcare will have to be borne by the government! This will ultimately result in higher taxes to pay for this medical care, paid by the taxpayers, who are the same workers who are now getting LESS pay, even though they are also PAYING EXTRA to get GOOD healthcare! This is what already has been happening in the European communities that our ‘fearless leader’ wants to emulate!

Canadians, for instance, who have their own socialized medicine/health care now, routinely come to the US, willingly paying the additional costs of US health providers when they have serious problems, at least those with access to funds! I’ve heard horror tales of weeks and months waiting to see a specialist, even after working through the waiting list lineup! Some, essentially living in the US, only venture home periodically to keep their place in this lineup! Some expectant mothers ensure their deliveries are in the US, resulting in a dual citizenship for their offspring! Another source of new US citizens! And soon to have the same crappy system here as they have at home! Lotsa luck, Canucks!

All this will finally spiral into a big, stinking mess, culminating in the demise of the US, for once and for all. It may take a few years, but it’s coming!
wumingren

In the end, it will still be our fault, as the Left will simply blame us for “letting” them do it. They’ll just whine, “You didn’t even try to stop us! It’s all your fault!”
rbdwiggins

Employment is not a right, and business does not exist to provide jobs, benefits or appease the entitlement mindset.

Your employer must decide whether or not increasing employee compensation in lieu of health care benefits advances their business model and/or satisfies the fiduciary responsibility to their bondholders.

It’s your choice, based on that decision and personal circumstance, whether to keep your current job or seek employment elsewhere.
dpmaine

Solving the problem by repealing the 10th amendment? No thanks.

Secondly, we still have the problem of unpaid care that hospitals have to provide to anyone who can’t pay. There are a lot of broke people in the US, who can’t afford to pay for care.
dpmaine

Good luck.

In 2014 you’ll be eligible for a subsidy of up to 80% of the cost of the premium + out of pocket expenses, which will probably reduce your cost.

The policy change is interesting, the few policy requirements that went into effect already have no caused many market repercussions YET, so you be on the leading edge of whats coming.
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jaykali

Ya it looks like he backed down bc of pressure, at least for the time being.
jaykali

Not sure why that would repeal the 10th amendment. It’s been a conservative opinion for some time that selling insurance across state lines would be a great way to increase competition. I am sure people in NJ would love to buy insurance from a company in Tennessee. We buy plenty of other things across state lines, why not insurance?

States are aware that you could have a Delaware type situation like in banking where every bank is located in Delaware. I would imagine that companies like BCBS for example would locate to a state with low regulation so that they could offer competitive pricing. Obviously states don’t like this which is probably why it will never happen.

Right now we have the worst of both worlds, we are a) trapped by state borders so we have only a small pool of insurers and b) now the feds are going to mandate essential coverage.
jaykali

Are you for sure? I am VERY confused by all of the rules. Does the employer mandate enforce the “essential coverage” stuff that would disqualify high deductible plans? Or is that something that is just enforced in the exchanges? I am guessing both.

I get lost in the distinction by what is mandated in the exchanges vs what is mandated to be provided by the employer. Are they enforcing the SAME “essential coverage” in both places?
jaykali

So along those lines I have completely forgotten an important point that you raised. So now we have an employer mandate right? But most employers like mine require the employee to pay 1/2, as you say. Is there a requirement in the law that says the employer must provide insurance AND pay at least X% of the insurance? Otherwise couldn’t you satisfy the mandate by lowering the amount the employer subsidizes the plan?
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perdido

No sir, that has nothing to do with repealing the 10th. It is entirely within the philosophy of Federalism and clearly one of the items best handled in re the powers granted under the Commerce Clause. This business of mandating coverages can and does get manipulated by mischievous State officials.

Regarding the ability to pay this is an example of Fed mandates, control of drug manufacturing & distribution and the ridiculous jury malpractice awards that need be addressed. The simple idea that the loser pays may go a long way toward stopping unscrupulous lawyers from suing for the settlement.

Fact is the Fed set this crisis up and has been waiting patiently for this to come to a head so they could swoop in and save us.
dpmaine

The private insurance market within a state is not interstate commerce, it’s just commerce. The Federal government has no right to interfere. See the 10th amendment for more information.

That said, creating a uniform national market for insurance will produce some savings, but not much. Look at things like homeowners insurance. There are still regional price differences even though there is largely a national market for it (state regulated but the large strokes are standardized – a HO3 policy in one state and in another state are very close).

Jury malpractice is a huge loser for us. It’s going to happen, and costs won’t move. Lawyers already take most of these cases on contingency, and so they already invest their own money in the cases. Just raising the amount they have to invest won’t change anything, except that when they win (which is frequently) they’ll just take a larger chunk from clients, and get larger awards to cover the infrequent loses. States like Florida already have strict limits on this type of activity, and it’s close to non-factor in pricing in risk.

We make hospitals provide free care. A lot of Americans can’t afford ANY of this care, let alone expensive ER care.
perdido

If a company based in Omaha sells medical insurance in Albuquerque that is interstate commerce. The wild variance in pricing is due to State mandates on coverage. This is an area ripe for Fed oversight but they haven’t because the problem hadn’t festered properly to justify the Fed coming in to save the states with a Fed system.

Your example of home insurance, nearly a non-sequitur, actually supports my position.

If those lawyers are going to have to pay when they lose, and they have their own time and money involved they will indeed think these suit through. Knowing the loser pays many more of those inclined to roll over and “avoid the cost of litigation” may have an incentive to bleed the lawyers too.

I agree, the absolute source of failing hospitals is forcing them to provide free care. Illegals have pushed many a facility into the ditch over the last decade.
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