By RICARDO ALONSO-ZALDIVAR | Associated Press – Thu, Sep 20, 2012
WASHINGTON (AP) — Nearly 6 million Americans — significantly more than first estimated— will face a tax penalty under President Barack Obama’s health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class.
The new estimate amounts to an inconvenient fact for the administration, a reminder of what critics see as broken promises.
The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed. The earlier estimate found 4 million people would be affected in 2016, when the penalty is fully in effect.
That’s still only a sliver of the population, given that more than 150 million people currently are covered by employer plans. Nonetheless, in his first campaign for the White House, Obama pledged not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.
And the budget office analysis found that nearly 80 percent of those who’ll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four.
Average penalty: about $1,200 in 2016.
“The bad news and broken promises from Obamacare just keep piling up,” said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, who wants to repeal the law.
Starting in 2014, virtually every legal resident of the U.S. will be required to carry health insurance or face a tax penalty, with exemptions for financial hardship, religious objections and certain other circumstances. Most people will not have to worry about the requirement since they already have coverage through employers, government programs like Medicare or by buying their own policies.
A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.
“This (analysis) doesn’t change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it,” said Erin Shields Britt of the Health and Human Services Department. “We’re no longer going to subsidize the care of those who can afford to buy insurance but make a choice not to buy it.”
The budget office said most of the increase in its estimate is due to changes in underlying projections about the economy, incorporating the effects of new federal legislation, as well as higher unemployment and lower wages.
The Supreme Court upheld Obama’s law as constitutional in a 5-4 decision this summer, finding that the insurance mandate and the tax penalty enforcing it fall within the power of Congress to impose taxes. The penalty will be collected by the IRS, just like taxes.
The budget office said the penalty will raise $6.9 billion in 2016.
The new law will also provide government aid to help middle-class and low-income households afford coverage, the financial carrot that balances out the penalty.
Nonetheless, some people might still decide to remain uninsured because they object to government mandates or because they feel they would come out ahead financially even if they have to pay the penalty. Health insurance is expensive, with employer-provided family coverage averaging nearly $15,800 a year for a family and $4,300 for a single plan. Indeed, insurance industry experts say the federal penalty may be too low.
The Supreme Court also allowed individual states to opt out of a major Medicaid expansion under the law. The Obama administration says it will exempt low-income people in states that opt out from having to comply with the insurance requirement.
Many Republicans still regard the insurance mandate as unconstitutional and rue the day the Supreme Court upheld it.
However, the idea for an individual insurance requirement comes from Republican health care plans in the 1990s.
It’s also a central element of the 2006 Massachusetts health care law signed by then-GOP Gov. Mitt Romney, now running against Obama and promising to repeal the federal law.
Romney spokeswoman Andrea Saul said Wednesday the new report is more evidence that Obama’s law is a “costly disaster.”
“Even more of the middle-class families who President Obama promised would see no tax increase will in fact see a massive tax increase thanks to Obamacare,” she said.
Romney says insurance mandates should be up to each state. The approach seems to have worked well in Massachusetts, with virtually all residents covered and dwindling numbers opting to pay the penalty instead.
Merrill Matthews, Contributor, www.Forbes.com
7/05/2012 @ 1:03PM
The U.S. Supreme Court may have upheld most of the Patient Protection and Affordable Care Act, but that won’t fix the law’s many flaws. Here are seven problems that riddle ObamaCare.
A Bevy of New Taxes. Supreme Court Chief Justice John Roberts engaged in some tortured reasoning to allow the mandate requiring people to have coverage based on Congress’s power to tax. Now Obama administration officials vehemently deny the mandate is a tax, even though that’s exactly what President Obama’s Justice Department claimed in its court briefings.
But setting aside the mandate and its penalty — er, tax — ObamaCare is filled with new taxes, at least 20 by some counts. There is a:
- 3.8 percent surtax tax on investment income and a 0.9 percent surtax on Medicare taxes for individuals making more than $200,000 and families making more than $250,000;
- 10 percent tax on tanning services and a 2.3 percent excise tax on medical equipment;
- 40 percent tax on comprehensive health coverage that costs more than the designated cap; and
- New taxes that apply to Flexible Savings Accounts and Health Savings Accounts.
Obviously, several of these taxes will hit the middle class. So it’s more than a little strange that the administration so adamantly denies the mandate’s penalty is a tax. What difference does one more “tax” make to an administration that has passed so many?
A Nation of Takers. The Mercatus Center at George Mason Universityrecently reported that about one-third of American households received Medicaid, food stamps or some other means-tested program in 2010. Add in Medicare, Social Security and unemployment and nearly half of all households are getting a government check.
ObamaCare dramatically expands that number. Medicaid coverage will go to an estimated 16 million more Americans. There are health insurance subsidies for those in the exchanges with incomes up to 400 percent of the federal poverty level ($92,000 for a family of four), which is about 75 percent of all U.S. households. We don’t know yet how many Americans will take advantage of the exchanges, but it likely will be millions — especially if employers start dropping their coverage.
Thus, thanks to ObamaCare, liberals will finally have the large majority of Americans taking money from the government (i.e., taxpayers).
A Maze of Cross Subsidies. ObamaCare is also filled with cross subsidies, a way of transferring wealth without using the tax code. Take one example: It requires health insurers to accept people with a pre-existing condition — which mostly affects individuals buying their own coverage — and puts a cap on how much insurers can charge. It is a popular provision only because most Americans don’t realize they will be paying higher premiums.
In order for individuals with preexisting conditions to get coverage at less than their actuarially rated risk, young and healthy people must pay more than their fair share — a lot more. Many of them will want to drop coverage because it will be so expensive; hence the mandate to try and force them to stay in. But even if everyone is in the pool — which they won’t be — the young and healthy will spend billions of dollars paying higher-than-necessary premiums to cross subsidize others.
Perverse Economic Incentives. The problem with the current health care system is that the economic incentives are all wrong. Patients have little reason to be value-conscious shoppers in the health care marketplace, because in the vast majority of cases someone else is paying the bill.
Doctors don’t know who their real customer is: the patient getting care or the government, employer or insurer paying for it. The situation often pits health care providers against patients who want everything and the payers who want to limit costs. It’s a no-win situation of perverse economic incentives, and ObamaCare only exacerbates the problem.
A Health Care Spending Explosion. Team Obama believes that if you get more people covered for even more services — including numerous “free” services — health care spending will go down.
Virtually any health actuary knows just the opposite will happen: health care spending will explode. Just consider that insured people spend a little more than twice what uninsured people spend on health care.
ObamaCare is supposed to cover an extra 32 million previously uninsured people with very comprehensive coverage. It’s a recipe for massive new spending.
Rationing Is Inevitable. And when health care spending explodes, Washington will scramble to find a way to contain what wasn’t supposed to happen — just like the unemployment rate wasn’t supposed to go above 8 percent — both for political and economic reasons.
The economic reasons are obvious: The government will be subsidizing so many people that even minor increases in health care costs will have huge budget implications. Cuts in care and services will be made. And the mechanism to do that, the Independent Payment Advisory Board (IPAB), is already in place.
ObamaCare’s Greatest Failure. ObamaCare is imposing a mid-20thcentury health insurance model on a 21st century global economy.
- The Internet brings consumers countless products and services from countless vendors; yet ObamaCare provides four choices from a handful of insurers.
- Technology creates fast-paced change while ObamaCare’s 2,700 pages ties up almost everything in the snail-paced legislative and bureaucratic processes.
- Innovators and entrepreneurs are asking what consumers want; ObamaCare tells both patients and providers what they can and can’t have.
The Affordable Care Act looks backward — to the days big-government and grand social schemes. It is the wrong policy for the dynamic and fast-paced 21st century. The president says he is willing to tweak it, but it can’t be tweaked enough. It is an albatross fit for 1960, not 2012.
Read more here.
Published: Friday, 12 Oct 2012 | 9:47 AM ET
By: Jeff Cox
CNBC.com Senior Writer
Uncertainty over tax structure, health care and job market stability is heightening tensions and making it difficult for entrepreneurship, the owner of Wynn Resorts and critic of President Obama said in an interview.
“That can probably explain to you why I’ve become so concerned about what’s happening in Washington, because it’s affecting the living standards of my employees,” he said. “They’re all filled with anxieties these days.”
He specifically cited Washington battles over getting the debt and deficit under control, along with the possibility of “tax increases and increases in the cost of doing business that are totally unnecessary and irrelevant.”
“They’re noticing in their homes…that their paychecks are shrinking in real time because of government irresponsibility and the management of this deficit,” Wynn added. “It’s killing the living standard of my employees, and that immediately affects their attitude at work.”
Wynn caused a stir earlier this week when he said, “I’ll be damned if I want to have (Obama) lecture me about small business and jobs.”
He told CNBC that administration plans to reform health care and spur job creation have done the opposite and are examples of “outrageously bad government by any standard.”
Conversely, he said if Republican Mitt Romney wins “you should go long on the stock market.”
Read more here.
By Erik Wasson, TheHill.com - 09/10/12 01:43 PM ET
The nonpartisan Congressional Budget Office reported Monday that the 2012 budget deficit through August stands at $1.17 trillion.
It estimated that $192 billion was added to the deficit in August, crossing the symbolically important trillion-dollar threshold. This is the fourth straight year that the deficit will exceed one trillion dollars, all under President Obama. The deficit in 2008 was $459 billion.
Eleven months into the fiscal year ending on Oct. 1, the deficit is about $70 billion less than at this point in fiscal 2011. Revenue increases account for the difference, with incoming revenue increasing 6 percent and spending increasing 2 percent despite the efforts of Congress to reduce it.
So far this year, revenues have increased $126 billion, the CBO estimated, while spending has increased by $57 billion.
The report comes as the GOP has made the budget deficit a central issue in the 2012 election campaign.
GOP presidential nominee Mitt Romney has vowed to balance the budget by the end of his second term, but has not provided the full details of how he would do this while cutting taxes.
Obama has put forth his own deficit-reduction plan, which by the White House’s math would cut $4 trillion from deficits using a combination of taxes and spending cuts. The White House assumes a reduced deficit by counting war funds that are not being spent anyway and $1 trillion in spending cuts from the 2011 debt ceiling deal with Congress, plus reduced interest on the debt.
Read more here.
Wednesday, August 1, 2012 – 12:01 am
No, the industry is not exaggerating effects to get sympathy.
Oh, how bad can a 2.3 percent excise tax be, really? Unfortunately, we will get to find that out in Indiana if Obamacare is not killed by Congress. The tax, which is imposed by Obamacare on medical devices, is estimated to bring in $29 billion over the next 10 years.
The medical-device industry is big and getting bigger – the field now employs more than 400,000 Americans. And many of those Americans are in Indiana. In an otherwise dismal economic climate in the past few years, the industry has thrived here, creating an estimated economic impact of more than $10 billion a year. All told, more than 20,000 Hoosiers are employed in the field, with nearly 6,800 in nearby Warsaw alone.
And all that is threatened by the new Obamacare tax.
Consider the effect on Indiana-based Cook Medical Inc., which estimates it will have to pay between $20 million and $30 million a year in new taxes. It has announced that because of those new expenses it is canceling plans to build five plants in the Midwest.
Some supporters of the excise tax claim that the companies are exaggerating the effects of the tax just to gain sympathy. More health care spending in general will make up for their losses.
But that’s the kind of argument advanced by those who have no concept of how the private sector really works. They have yet to learn that we end up with less of anything that is taxed.
About 70 percent of medical-device manufacturers are classified as small businesses, and they have two special needs: They have to compete for top and expensive talent, and they have to spend tremendously on research and development. They don’t have great margins within which to turn a profit.
For example, it took Abiomed 30 years to show a profit building specialized heart pumps – $1.5 million in fiscal 2012. If the medical-device tax had been in effect, company officials said, the company would have had to turn in every penny of its profits and another $1.4 million on top of that.
In an op-ed earlier this year, U.S. Rep. and GOP gubernatorial candidate Mike Pence said the tax will cost the state more than 2,000 jobs. And it’s impossible to even calculate how harmful this will be to the people who need the medical devices.
Pence was one of the sponsors of legislation to repeal the medical-device tax. The House voted for the repeal in June, but the legislation has stalled in the Senate. Maybe Sen. Richard Mourdock should make that his first order of business. It’s time to jump-start this stalled federalism beast.
A conflict of visions.
OCT 22, 2012, VOL. 18, NO. 06 • BY CLAUDIA ANDERSON AND WILLIAM ANDERSON
There’s a collision brewing between Indiana and Washington over health care: whether our system will be a top-down affair of central planning, or whether it will leave any room for bottom-up arrangements that rely on dispersed, individual decision-making and resource-allocation by self-correcting consumer choice. The relevance to pending national decisions is obvious. Here’s how it began.
In 2006, at the instigation of a new governor, Indiana added a consumer-driven health plan (CDHP) to the benefit options offered to its 35,000 state employees. That first year, 4 percent of state workers chose it. This year, 94 percent did.
Then in 2008, the state again used a consumer-driven model to create an affordable health plan for low-income Hoosiers not eligible for Medicaid. To date, this Healthy Indiana Plan (HIP) has served over 98,000 people. Of users surveyed, 94 percent said they were satisfied with the program, and 99 percent would reenroll, according to the governor’s office.
The idea behind consumer-driven health plans is that people are careful shoppers when paying for services piecemeal but tend to overuse what seems to be free—think of an open buffet. Making every consumer of health care cost-conscious will spread market discipline throughout the system, the thinking goes, and contain prices more successfully than commands from on high. Indiana is now the largest test laboratory in America for this concept as applied to health care. And the results are encouraging. Not only are the customers satisfied, but overuse of emergency rooms and specialists has declined, use of generic drugs has risen, the state’s cost for insuring its workers has been reduced, and—most remarkable—the participants have accumulated in their personal Health Savings Accounts combined reserves of nearly $60 million. That’s $60 million worth of health security for the future.
The tax-free Health Savings Accounts (HSAs) for out-of-pocket expenses are just one feature of Indiana’s CDHP for state workers, along with high-deductible insurance and 100 percent coverage of preventive care. The state deposits money in each worker’s HSA every pay period, and employees can make contributions as well. Employees receive a simple statement every month showing deposits, expenditures, and balances.
It’s the HSA that users seem to appreciate most, judging by interviews with a dozen state workers approached at random in the main state office building here the other morning. “Actually, I love it,” said one fortyish paralegal who’s been in her state job almost a year. “Saving those pre-tax dollars benefits me—I’m a single mom.” A middle-aged administrator noted, “You’re saving as you go, so you have the resources when you need them.” Two others emphasized, “You decide how much you put in,” and, “The state gives you money.”
Still, some employees have tried a CDHP and preferred to return to traditional health insurance. Not many, though—under 3 percent.
State budget hawks are delighted at the savings. An independent analysis by the consulting firm Mercer in 2010 concluded that the CDHPs reduced costs to the state by 10.7 percent per year, for projected savings of $17 to $23 million in 2010. That’s in addition to the $7 to $8 million employees themselves were projected to save.
The users’ savings come from cost-conscious decision-making. “Employees and dependents have historically been . . . shielded from the actual costs of health care services,” noted Mercer. CDHP “participants are exposed to the full cost of health care services and forced to decide if the care is appropriate.” Providers, for their part, like receiving immediate payment, without the rigmarole of third-party reimbursement.
The common objection to market-based schemes is fear that people paying out of pocket won’t go to the doctor. Mercer found “no evidence that participants in the CDHPs are avoiding care”—no reporting of health difficulties resulting from deferred care, no flood of complaints, no exposés in the press, barely a trickle of participants returning to traditional insurance. At present, CDHP participants are getting preventive care at rates higher than those in the traditional plan, according to the governor’s office.
While the savings alone are eye-catching, especially with control of health care costs by fiat continuing to fail nationally, it is the intangible value of consumer-driven care that is primary for the mastermind of Indiana’s reforms, Governor Mitch Daniels. Nearing the end of his second four-year term in office, Daniels is emphatic that this is the approach to health care “consistent with human dignity.”
Read more here: http://www.weeklystandard.com/articles/indiana-vs-obamacare_654423.html
Scott W. Atlas, M.D., Contributor
Despite the attempt to highlight the new Census Bureau’s reported net decrease in uninsured of 1.3 million people, or 0.6%, as a success story for the Affordable Care Act, we know the reported drop in the number of uninsured actually reflects increases only in government insurance, including 2 million newly insured under Medicare merely by aging, and another 2 million joining Medicaid; likely as a consequence of the economic stagnation under this administration.
Meanwhile, ObamaCare’s failures are already widespread.
A key source of the ACA’s projected savings, the CLASS entitlement designed to provide unlimited, lifetime benefits for long-term care, was quickly abandoned. Recognizing that its premiums, $86 billion by 2021, would finance the rest of ObamaCare instead of its own costs, Sen. Kent Conrad (D-N.D.) called CLASS “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of,” and vowed to block its inclusion in the Senate bill. Medicare Chief Actuary Richard Foster calculated the program needed to enroll more than 230 million— more than the entire nation’s workforce — to be financially feasible. HHS Secretary Kathleen Sebelius was forced to admit last October that the plan simply wouldn’t work, even backpedaling to Congress that “my comment was that it was unsustainable as the legislation was crafted.” CBO Director Douglas Elmendorf noted that month that the “CBO would have estimated that the Repeal the CLASS Entitlement Act would increase federal budget deficits by $83 billion over the 2012– 2021 period, relative to the March 2011 baseline,” thereby eliminating 40 percent of the CBO’s previous budgetary savings of the ACA.
The ACA’s Accountable Care Organization (ACO) blueprint was unworkable from the start. Touted as a new model where doctors and hospitals work together to eliminate unnecessary care, the Centers for Medicare and Medicaid pilot program did not work, saving only $100 per beneficiary annually. Even though President Obama put forth Mayo Clinic and Geisinger Clinic as models of what he wanted to achieve, the American Medical Group Association, representing those very same organizations – Mayo Clinic, Cleveland Clinic, Geisinger Clinic and many other premier health care groups – wrote the administration that a full 93 percent of its members would not participate, because the rules were “overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve.”
The ACA’s medical device tax – on revenues, not just profits – is already destroying high-paying jobs for Americans and moving them overseas. Directly accounting for more than 400,000 high-paying U.S. jobs of the sort our young people seek, these companies arealready eliminating jobs because of ACA’s onerous taxes. ACA’s new taxes will cost Boston Scientificmore than $100 million a year, so they built a $35 million research center in Ireland instead of the U.S. and announced another $150 million site in China. Stryker of Michigan announced job cuts of 1,000 workers last November “in advance of the new Medical Device Excise Tax.” CEO Curt Hartman reiterated this month that the tax will force companies to move their operations overseas, eliminating American jobs.
Cook Medical of Indiana scrapped plans to open five new plants in the Midwest, while saying “in reality, we’re not looking at the U.S. to build factories anymore as long as this tax is in place.” CEO Alex Lukianov of San Diego’s NuVasive wrote “to offset this tax increase, we will be forced to reduce investments in research and development and cut up to 200 planned new jobs next year” and “as a result of the law, for the first time in our history we are being compelled to consider moving manufacturing, clinical trials and investment in new innovation to more business-friendly countries.” And CEO Mark Waite of Lighthouse Imaging in Maine stated what is obvious to anyone with an understanding of business – “”This [tax] will end up making the cost of goods higher, and since most of these medical devices are required, as opposed to being optional, that cost gets passed on to the consumer and the cost of care goes up.”
The Medical Loss Ratio mandate is already forcing insurers out of the market and reducing insurance choices for Americans. Five insurers, including two of the nation’s largest, already decided to stop selling health insurance in Indiana, mainly because of the ACA edict, according to theIndianapolis Business Journal. And the American Enterprise Group, citing the medical loss ratio and other regulatory burdens, will stop offering individual insurance in more than 20 states, causing 35,000 people to lose their coverage and create a less competitive insurance market. Ironically, young adults are also seeing their choices disappear, as colleges are dropping low cost, limited coverage plans altogether or pricing students out of health insurance because of these actuarial requirements and the bureaucrat-defined list of “essential” benefits dictated by ObamaCare.
A repeated series of waivers to the ACA were urgently granted by HHS, in order to prevent widespread loss of coverage and substantial premium increases caused by ObamaCare’s own decrees. More than a thousand waivers to unions, states, and corporations that cover about 4 million people were granted to avoid “significant increases in premiums or significant decreases in access to health care benefits”… “needed to meet the annual limit requirement” wrote John Dicken, Director of Health Care Issues for the GAO in his letter to Congress.
Meanwhile, ObamaCare forces highly publicized rebates, but the truth is that they may or may not amount to much. As the Virginia-Pilot reported, “Clifton Alford, a Norfolk chauffeur, opened two letters from his health insurer on the same day this summer. One contained a $9.83 rebate check; the other announced a $44 increase in his monthly premiums for the same plan. Alford, 36, said he was tempted to cash the check in pennies: ‘The only other thing I can think of to do would be to send it to Washington and tell them where to shove it.’”
The record is clear – since its rush to passage by President Obama and the Democrat-controlled Congress in 2010, the ACA is doing harm. While the president’s supporters try to control the message, it becomes even more urgent that all Americans realize that an alternative choice is at hand. As opposed to President Obama’s passion for more government control, Governor Romney trusts free market solutions. And instead of government panels to limit care, Mitt Romney’s commitment is that all Americans deserve the right to decide with their doctors how aggressively they want to pursue advanced medical care. Mitt Romney and Paul Ryan want Americans and their families to control their own health care decisions. Their plan would facilitate competition to improve choice and reduce costs, and provide seniors with the option of private insurance. But giving seniors a choice is an idea that this administration finds unacceptable.
At the inception of ObamaCare, then Speaker Nancy Pelosi said Congress had to “pass the bill so you can find out what is in it.” And now we have found out. Filled with new entitlements and symbolic hand-outs, the true impact of this extraordinarily damaging law has only just surfaced in advance of its most destructive effects to come. Only the voters can stop it.
Read more here.
Annie Z. Yu, www.dailycaller.com
1:15 AM 09/29/2012
A poll released this week by the National Association of Manufacturers and the National Federation of Independent Business (NFIB) shows that a majority of small business owners and manufacturers think the U.S. business environment is getting progressively worse.
The national survey, conducted between Aug. 13 and Sept. 4, interviewed 800 small business owners and manufacturers and found that 69 percent of them think President Barack Obama’s policies have hurt American businesses and manufacturers, and 55 percent would not start a business today given the current environment.
“That’s something I think for us is not only alarming but really disappointing, because these are the risk takers in the economy,” NFIB vice president of public policy Brad Close told The Daily Caller. “I think that’s a red flag and it should be very troubling to folks, that entrepreneurs are saying they would not do what they did 10, 15, 20 years ago today if they had the choice.”
The survey showed that small business owners and manufacturers think federal regulations, taxes, government spending and the costs of health insurance and energy are the main causes of slow economic growth.
“What we’re up against is a tremendous amount of regulations,” Gordon Hunt, president and chief marketing officer of Illuminating Technologies, told TheDC. “We don’t want airplanes falling out of the sky, but we probably don’t need to know what size the cup can be that you serve Coke to us in the plane.”
Hunt said his company has covered 100 percent of their employees’ health insurance since the day they started, but they may not be able to continue doing that in the face of Obamacare.
“We’re really doing everything we can to keep [our employees] covered, but if our competition decides they’re better off paying a small penalty versus a higher cost of insurance for their employees, they’re going to have a competitive advantage over us,” Hunt said.
Rose Corona, owner of Big Horse Feed and Corona Ranch & Land Company, said the amount of regulation can be overwhelming and difficult, making it harder for her to focus on her business.
Corona, like Hunt, has had to make some tough management decisions in the face of the economic downturn.
“The killer for me is when I have to cut hours and maybe let somebody go. That’s a hard, hard decision,” Corona said. “I’ve gotten to having a lot more discussions with my staff … [about if] they are willing to take a little bit less hours, each one of them, so somebody can still stay on staff.”
“I think that small business is the answer to a lot of our economic problems, but we need to be left alone to do what we do best,” Corona said. “Government needs to get the heck out of our way … and give us the freedom to be able to create those jobs and those opportunities so we can get this country back on its feet.”
Read more: http://dailycaller.com/2012/09/29/poll-small-businesses-manufacturers-have-bleak-outlook-on-us-economy/#ixzz29KkdnmF0
Darden tests limiting worker hours as health-care changes loom
7:15 p.m. EST, October 7, 2012|
By Sandra Pedicini, Orlando Sentinel
In an experiment apparently aimed at keeping down the cost of health-care reform, Orlando-based Darden Restaurants has stopped offering full-time schedules to many hourly workers in at least a few Olive Gardens, Red Lobsters and LongHorn Steakhouses.
Darden said the test is taking place in “a select number” of restaurants in four markets, including Central Florida, but would not give details. The company said there has been no decision made about expanding it.
In an emailed statement, Darden said staffing changes are “just one of the many things we are evaluating to help us address the cost implications health care reform will have on our business. There are still many unanswered questions regarding the health care regulations and we simply do not have enough information to make any decisions at this time.”
Analysts say many other companies, including the White Castle hamburger chain, are considering employing fewer full-timers because of key features of the Affordable Care Act scheduled to go into effect in 2014. Under that law, large companies must provide affordable health insurance to employees working an average of at least 30 hours per week.
If they do not, the companies can face fines of up to $3,000 for each employee who then turns to an exchange — an online marketplace— for insurance.
“I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week,” said Matthew Snook, partner with human-resources consulting company Mercer.
Darden said its goal at the test restaurants is to keep employees at 28 hours a week.
Analysts said limiting hours could pose new challenges, including higher turnover and less-qualified workers.
“It’s a real problem for restaurants,” said Howard Penney, a restaurant analyst and managing director for Hedgeye Risk Management.
Darden, the world’s largest casual-dining company and one of the nation’s 30 largest employers, said it offers health insurance to all its approximately 185,000 employees. Many are offered a limited-benefit plan. That type of coverage is being phased out under health-care changes, which will ban annual limits for most plans.
About 25 percent of Darden workers are full time, meaning they work more than 30 hours a week. Though employees say Darden already offers traditional health insurance to full-timers, Janney Capital Markets analyst Mark Kalinowski said the cost of providing that could become higher for Darden under the Affordable Care Act. Because that law requires everyone to have health insurance, more workers will likely choose its coverage, Kalinowski said.
“Even a modest jump up in the amount of employees that decide they want the insurance you’re offering could have a meaningful impact on your bottom line,” he said.
Under the system Darden is testing, employees are to be scheduled for no more than 28 hours each week. They can run over that if things get busy, but Darden acknowledged they are not supposed to exceed 30 hours.
At a new Olive Garden in Stillwater, Okla., former busboy Keaton Hasty said employees were routinely limited to 29 1/2 hours.
“It was 29 1/2, and they’d kick you out,” said Hasty, a college student who now works at a pharmacy. “They’d always print off a little slip every day and say who was getting close.”
And Michael Walker said when he applied for a job at a new Olive Garden in Hammond, La., he was told that except for a few “key training positions,” only part-time jobs were available for hourly workers.
“Without having full health care … I don’t see that as an option,” Walker said. He decided to stick with his current job at another restaurant.
Darden told analysts last year it would consider changing its mix of part-time and full-time employees to reduce costs.
Darden has been aggressively keeping labor costs down. It has cut bartenders’ pay and required servers to share tips with them. It also has eliminated busboy positions at Red Lobster and reduced the number of servers working each shift at that chain.
Labor costs as a percentage of sales have dropped steadily from 33.1 percent in fiscal 2010 to 30.8 percent in the most recent quarter.
Read more here.
By Paul Bedard, The Washington Examiner
September 18, 2012
A week after small businesses warned that Obamacare taxes will eat up to half of their profits, a new government report reveals that simply complying with the new tax rules in the health care act will cost American families and businesses nearly 80 million hours–essentially a whole new tax.
Based on Internal Revenue Service figures, the House Committee onWays and Means has compiled an estimate of the total amount of hours it will take to comply with the tax rules. The bottom line: 79,229,503 hours, most of which will fall on small businesses.
For fun, the committee gave a comparative example.
“So, what can be done in 79,229,503 hours? The Empire State building, which took 7 million man-hours to build, could be constructed 11 times. The Curiosity Lander could travel from Earth to Mars 13,048 times. Halley’s comet, seen from Earth once every 76 years, could be spotted 119 times.”
The committee said that Obamacare has resulted in thousands of pages in IRS and Treasury rules including 17 regulations, 5 revenue procedures, 2 revenue rulings, and 14 Treasury decisions.
“Given the enormous impact the regulations will have on job creators, it is no wonder that a recent survey found that over 70 percent of small businesses cite the health care law as a major obstacle to job creation,” said the panel headed by Rep. David Camp.
Read more here.