Obamacare is Raising Health Care Costs and Causing People to Lose their Health Insurance

Posted by PITHOCRATES - April 13th, 2013

Week in Review

Members of Congress think they’re smarter than the average business owner.  But they’re not.  In fact, when it comes to running a business most Congress people don’t have a clue.  Yet they continuously pass new legislation.  Discounting any concerns business owners may have.  With a certain measure of disdain.  For business owners are, after all, the enemy.  Because they object to paying higher taxes.  And they object to higher regulatory costs.  Just so they can keep their earnings.  And that’s just being greedy.

When the Democrats rammed Obamacare through Congress on a straight party vote the business community said this legislation was going to hurt them.  But Congress didn’t care.  Their basic attitude was ‘screw them’.  They’re just greedy.  But they weren’t being greedy.  They were just worried how they were going to stay in business under Obamacare (see Some Small Businesses Opt for the Health-Care Penalty by EMILY MALTBY and SARAH E. NEEDLEMAN posted 4/8/2013 on The Wall Street Journal).

Mr. Levi currently spends about $140,000 a year on insurance premiums to cover 25 managerial staff at his business, Consolidated Management, which runs cafeterias at schools, offices and jails.

Under the new law, he will have to offer insurance to all of his 102 full-time employees starting in January. Assuming all of them take the coverage, Mr. Levi says the cost of premiums could exceed $500,000.

“I’ve never made a profit in any year of the company that has surpassed that amount,” says Mr. Levi, 62 years old. “I don’t make enough money.”

He says it makes more sense to drop insurance entirely and pay a penalty of about $144,000…

Mr. Levi…is worried that failing to offer insurance could entice employees to seek employment at competing businesses that do offer benefits.

“If we don’t offer coverage, will it be harder to hire people?” he asks. “That’s the unknown.”

Meeting the new health care mandate will turn an operating profit into an operating loss.  Now as much as the Democrats may hate the very idea of profits a business just can’t remain in business if it doesn’t make a profit.  So his choices are go out of business or cut health care.  But if he cuts health care he may lose employees.  And have trouble hiring new employees.  For even though the majority of his employees were happy to work without health insurance those positions that had it may be very hard to fill without it.  Which may leave the only option available is the going out of business option.  Putting 102 people out of a full-time job.  And he’s not alone.

Mr. Epstein, 52, employs about 250 workers and currently provides health insurance to his 20 office personnel. If he were to start covering the 100 or so nurses and nursing assistants that work full time, his annual health-insurance costs would jump to roughly $600,000 from the current $100,000, he says.

Even if he takes the penalty option, he estimates he would have to pay about $240,000—a cost he doesn’t think his business could absorb. To compensate, he plans to cut the number of hours his nurses and nursing assistants work so they will be considered part-time under the law. He says he will hire more part-timers to ensure patients receive the same level of care.

Few business can just absorb another $500,000 in costs.  Even absorbing an additional $140,000 is not that easy.  Unless you have a monopoly and can just increase your prices.  But few have the privilege of just increasing their prices to absorb additional costs.  Most have to figure out how to cut costs elsewhere.  Such as dropping insurance coverage.  Forcing full-time workers to part-time.  Or deducting more out of their paychecks for the higher insurance cost.

To avoid the employer mandate, some small firms are considering other strategies, such as increasing employees’ share of the premiums, so they don’t have to shoulder the entire cost of offering benefits. Others say they will stay under the 50 full-time employee threshold or deliberately turn full-time workers into part-timers.

This is the reality of Obamacare.  And when it hits our businesses with higher regulatory costs it is ultimately the employees of the business that pay.  If you have ever wondered why the current economic recovery is one of the worst in history this a big reason why.  Obamacare.  It has frozen hiring.  And even pushed full-time workers to part-time.  All in the name of trying to pay the costs of Obamacare.  Which, according to the geniuses in Congress, was going to make everything better.  Giving everyone high-quality health care.  While cutting health care costs.  So far it appears to be doing the exact opposite.  And they’re still rolling it out.  So the worst is, no doubt, yet to come.

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