Can U.S. Businesses Afford Obamacare?

No doubt you have heard that the Olive Garden, Denny’s and Papa John’s Pizza all are slapping an “Obamacare surcharge” on the price of their products.  They claim they have no choice.

But the news that Americans might pay 50 cents more for a mediocre $10 meal at the Olive Garden is not what bothers me most. Since President Obama was re-elected each of these restaurant chains have announced that they also plan to cut many full-time workers’ hours back to less than 30 hours a week in order to duck the cost of providing health care benefits.. This means that employees who are now working 40 hours a week will have to look for a second job—or find a way to support themselves on less than three-quarters of their current salary.

Michael Tanner, a fellow at the conservative Cato Institute, argues that companies outside the restaurant business also will be forced to down-size. Just a few days ago, Tanner wrote: “While restaurants are especially vulnerable to the cost of Obamcare other business are being hit too. For example, Boston Scientific has announced that it will now lay off up to 1,400 workers and shift some jobs to China. And Dana Holdings, an auto-parts manufacturer with more than 25,000 employees, says it too is exploring ObamaCare-related layoffs.”

Obamacare will  “keep unemployment high,” Tanner claims, because under reform legislation, businesses that have at least 50 employees working over 30 hours a week are expected to offer their workers affordable health insurance. If they choose not to, and more than 30 of their employees qualify for government subsidies to help them purchase their own coverage, the employer must pay a penalty of $3,000 for each worker who receives a subsidy— up to a maximum of $2,000 times the number of the company’s full-time employee minus 30. (The Kaiser Family Foundation offers an excellent graphic explaining the rule.) 

By paying the fine, the employer is, in effect, paying a share of a tax credit that would cost the government anywhere from roughly $1,700 for a single young worker  to over $12,000 to help the average 35-year-old worker who has a spouse, two children, and reports $35,000 in total household income.

Conservatives like Tanner argue that that is unfair, and that small businesses– “the engine of job growth”– will be hit hardest.  

What they  don’t do is look at the math:

  • Just how much would the penalties add to a food chain’s operating expenses?
  • Would raising the price of a medium-sized pizza by 5 cents cover that cost? I
  • If most of a fast-food chain’s workers are young and single, how much would a firm have to lay out to cover 65% of their premiums?

Conservatives also ignore the fact that companies with fewer than 25 employees are exempt from the penalties.  And they rarely talk about how, under the ACA,  many small  businesses will receive generous subsidies to help pay their share of premiums. .

Finally, is Obamacare the real reason that some companies continue to lay off workers?  Boston Scientific began reducing its U.S. workforce early in 2010, in part because it wanted to begin selling more devices in China– but also because it has been under intense US regulatory scrutiny in recent years because of defects in a pair of its best-selling cardiac products: tiny mesh tubes known as stents that are used to keep cleared arteries open and implantable defibrillators that send electric shocks to restore heart rhythm. (Maybe in China regulators won’t be so picky about medical device manufacturers concealing defects.)

In 2011 the Boston Globe published a long story about the layoffs at Boston Scientific. Executives at the company didn’t  even mention the cost of health insurance.   Instead, they emphasized the opportunities abroad: “Boston Scientific unveiled a plan on Wednesday to spend $150 million to step up its commercial activities in China, one of the world’s fastest-growing medical device markets.”

If a company like Boston Scientific wants to export jobs, Obamacare is an easy excuse.

Fox Breaks the News to Denny’s Employees                    

On November 15, Denny’s John Metz made his decision known on Fox News . This is how 1,200 employees of RREMC Restaurants found out that beginning in January 2, 2014, “most” of Metz’s staff will find their weekly hours slashed from 40 to 28.

Otherwise, his company might have to pay as much as $2.34 million in penalties. ($2,000 times 1,200 employees minus 30 –or 1170 employees– equals $2.34 million.) This assumes that all of his workers apply for and receive subsidies. One wonders: how much of the $2.34 million would be covered by the 5% increase in prices?

Alternatively, Metz, might offer his workers health benefits. Most of them are young, many are single. And according to Congressional Budget Office (CB0 ) estimates, comprehensive insurance for a single person under 30 will cost around $3,400 in 2014. )  Employers would be expected to cover just 65% of the premiums.  Offering insurance might actually cost less than the the penalty (65% of $3,400 equals $2,210.)

And of course, Metz  could write off the cost of insurance against profits. (His businesses are doing quite well.)  Meanwhile his largesse would return benefits to his business:  studies show that when employees have access to health care, absenteeism falls and productivity rises.

Nevertheless, on Fox, Metz declared: “Everyone’s looking for a way to not have to provide insurance for their employees. It’s essentially a huge tax on all us business people.”  

Update: Since making that statement Metz, whose company owns more than 30 Denny’s locations, heard from Denny’s corporate headquarters.  Yesterday, Huffington Post reported that Denny’s “CEO John Miller privately reached out to Metz to express his ‘disappointment’” with the Florida franchisee’s controversial statements about Obamacare –which sparked a wave of backlash for the national restaurant chain over the past few days.”  Customers were threatening to boycott. Other franchisees were furious:  Metz’s grandstanding on Fox was costing them business.

Monday night Metz expressed ‘regret’ over his statements. He added: “We have always been and will continue to be 100 percent dedicated to our employees and customers and will work tirelessly to find solutions that are in their best interests. It is our intention is to fully comply with the law.”

Does this mean that Metz has realized that he can, in fact, offer benefits to his employees without slashing their paychecks?

What is certain is that Metz greatly exaggerated the burden that Obamacare places on employers.  As I explain below, companies outside the health care industry will pay a very small share of the total cost of funding the Affordable Care Act (ACA).

The important question is: can they afford it?

                                              Papa John’s  

Managed Care Matters’ Joe Paduda recently took a hard look at the numbers that led Papa John Pizza founder and CEO John Schnatter to announce that he’s going to have to hike the price of his pizzas by 10 to 14 cents to cover the added cost of complying with Obamacare’s provisions.

“Turns out that it’s only 3.4 to 4.6 cents” for an average-sized pie,” Paduda observes.  “Let’s think about that,” he continues. “Fourteen cents a pizza gets all of his employees excellent health coverage (only about a third are covered now), even though Schnatter says he’d ‘like to cover all of them.’”

Over at Forbes, Caleb Malby eyeballed Schnatter’s balance sheet and confirms Paduda’s appraisal: Obmacare does not constitute a major threat to profit margins. “Last year, Papa John’s International captured $1.218 billion in revenue,” he reports. “Operating expenses were $1.131 billion.” Schnatter claims that Obamacare will his cost his company $5-8 million annually. “If Schnatter’s math is accurate,” Malby writes, “ the new regulation translates into a .4% to .7% (yes, fractions of a percent) expense increase.”

“Using Schnatter’s figures,” he concludes, “the costs his company will incur due to Obamacare are not equal to the price increases he mentions. Those increases would more than make up for damage done to the company’s net income through increases to operational expenses.”

Why,Then, Is Papa John Threatening to Cut  Employees’ Hours? Politics, not Economics

 After President Obama was re-elected Papa John announced hat he would have to turn many of his employees into part-timers.  Schnatter, who was a Mitt Romney fundraiser and supporter, may not have been happy about how his fellow citizens voted. It’s beginning to seem that many of these decisions have less to do with profit margins than with ideology.

To his credit, Paduda doesn’t turn his post into a personal attack on Papa John:  “This isn’t to slam Schnatter, who by all accounts is a decent guy who raises money for worthy causes and tries to stay out of public politics. He does get a bit too aggressive in his marketing efforts, but hey, that’s not the worst thing in the world.”

Paduda is more concerned about the larger trend: “Schnatter’s perspective . .  .  is consistent with what we’ve heard from other chain food outfits” and it “is myopic—in several ways. If his company doesn’t provide insurance for his low-paid workers, we taxpayers have to. That’s the way Obamacare works: folks with incomes below 400% of the FPL (federal poverty level) can get subsidized coverage.”

Paduda sums up his argument:Schnatter is avoiding his responsibility ” while shifting the burden to others. 

Do Employers Have An Obligation to Provide Health Benefits?

More than one of Paduda’s readers challenged the notion that Schnatter has a “responsibility” to his workers.

Bob W. wrote: “I question the phrase “Schnatter is avoiding his responsibility.” I am wondering when providing for employees personal needs (and health care is a personal need) became the employer’s responsibility. I am hoping for a bit more morally based response than “because it is the law.”

Paduda replied: “Bob—thanks as always. In response to your query as to when it became an employers’ responsibility to provide health insurance, that would have occurred when PPACA was passed, signed into law, and upheld by the Supreme Court. Laws run this country, not morals. If ‘morals’ did, we never would have invaded Iraq or water-boarded prisoners or interned Japanese Americans or overturned legitimate governments in Africa and central America or supported the Shah of Iran. ‘Morals’ are personal; laws are societal.

“As to a potential decision to cut employees’ hours, I’d reiterate that in doing so Schnatter is requiring you and I to pay for his employees’ health care costs. That is a personal decision on his part, and one he is indeed entitled to make. However, in doing so, he is choosing personal gain at the expense of society as a whole.”

I agree,  When our elected representatives decided that it was time to provide access to healthcare for all Americans, they decided that this should be a matter of “shared responsibility.”  They didn’t exempt Papa John. Or Boston Scientific.  All of us are asked to contribute, by buying health insurance– if we can afford it. (If it will cost more than 9.5% of our income, we will receive subsidies.)

I would quibble with Paduda on just one point: He suggests that “you and I” will be footing the bill.  But “we” (middle-class and upper-middle-class taxpayers) won’t be paying for the subsides. It would be more accurate to say that Papa John expects other businesses (mainly businesses in the health care industry) and  very wealthy families to kick in the money to provide subsidies for his workers.

                             Who Will PIck Up Papa John’s Tab? 

Only 2% of taxpayers (those earning more than $200,000, $250,000 for couples) are asked to help fund the Affordable Care Act. About a year ago, I wrote a brief that analyzes what the ACA will cost– and where the money will be coming from.  (Better Care for Less: How the Affordable Care Act Pays For Itself, and Cuts the Deficit.) You will find a short introduction and a link to the brief in this HealthBeat post.)

That is what I discovered: Over the ten years from 2010 to 2019, reform will cost roughly $940 billion as we begin to offer near-universal coverage. The ACA does this primarily by providing subsidies for middle-income and low-income families (at a projected cost of $466 billion) and by expanding Medicaid and SCHIP, the government health programs for the poor (estimated cost, $434 billion.)

The Congressional Budget Office (CBO) calculates that asking wealthy Americans earning over $200,000 to pay an addition 0.9 percent on wages and self-employment income over $200,000 (not on the first $200,000 that they earn) and 3.8 percent on investment income over $200,000 will generate $210 billion in new revenues. The lion’s share of the rest of the $940 billion will come from five other sources:

  • – $145 billion saved, over a period of ten years, by phasing out overpayments to private sector Medicare Advantage insurance companies that are not offering value (better care) to their customers.
  •  – $107 billion in new fees that insurers, drug makers, and medical device companies agreed to pay while Washington was hammering out the details of the ACA. This was a pragmatic decision on their part. These companies knew that if reform passed, their revenues would climb as millions of uninsured and under-insured new customers came to them, government subsidies in hand, able to pay for their products and services. Now some device-makers are beginning to whine. They must accept the fact that the deal is done.
  • –As much as $196 billion (CBO’s projection) by shaving Medicare’s annual increases in payments to hospitals, skilled nursing facilities, ambulatory surgical centers, and other institutional caregivers, by 1 percent a year, for ten years,  with the goal of making them more cost-conscious, and more efficient.  Research shows that when hospitals are under some financial pressure (not too much) they do a better job of squeezing waste out of their systems.
  •  –The ACA saves another $36 billion by trimming government subsidies to hospitals that ttreat a “disproportionate share” of poor patients.  (Under reform, they will no longer need most of that money because they will no longer  be forced to absorb the cost of treating 32 million uninsured Americans.) Hospitals accepted a total of $232 billion in lower revenues because, like others in the healthcare industry, they realize that reform will bring them millions of paying customers. Today, unpaid bills have created a pile of debt for a great many hospitals. Now, that pile will shrink.
  •  –$69 billion in penalties paid by employers and individuals who choose not to purchase insurance (Note that despite complaints, employers are paying less than 4% of the $960 billion tab,)
  • – $32 billion raised by taxing very expensive (“Cadillac”) health insurance policies that cost more than $27,500 for family coverage, or $10,200 for an individual plan.

   What Health Reform  Means for Small Businesses: Facts vs. Fiction

Arguably, successful large chains like Papa John’s or Denny’s can survive under Obamacare—especially if they raise their prices ever so slightly. But what about your favorite neighborhood restaurant? Your hair-dresser? Or the dry-cleaner down the street?

First, keep in mind that under the Affordable Care Act, employers with fewer than 50 employees are Not required to offer insurance.

Mom & Pop Shops do operate on truly thin profit margins. Unlike some restaurant chains Czars, their owners don’t take home $3 or $4 million a year. They don’t have stock options worth tens of millions.  But, under the ACA, the good news—both for these very small business owners and their employees–is that their workers will be able to buy their own insurance in the Exchanges where low-income and middle-income families will be eligible for subsidies. And when they receive subsidies,  their employers will not be subject to penalties.

At the same time, if very small businesses want to offer health benefits—and many are struggling to do just that—the ACA will help them.  Since 2010, firms with fewer than 25 full-time equivalent employees, and average salaries of $50,000 or less,  have been eligible for a tax break. To receive the tax credit, they must  they cover  half the cost of single (not family) policies.

From 2010 to 2013, that tax credit covers as much as 35% of the amount the employer lays out for insurance.

If a business doesn’t  owe tax in a given year, it  can carry the credit back or forward to other tax years. From 2014 to 2015 the maximum credit will be bumped up to 50% of the employers’ costs.  In addition, since the amount of the health insurance premium payments are more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit.  For some businesses, this will be an  extraordinarily good deal.

Finally, all small companies will benefit when state-run Exchanges called Small Business Health Options Program (SHOP) Exchanges open in 2014. There, small firms will become part of a large group, and this means that they will be eligible for lower large-group rates. (Because the administrative costs of hand-selling policies to  small groups, and enrolling and dis-enrolling customers are higher, insurers charge them more.)

Without health care reform, current data suggests that by 2016, average health insurance premiums for a single policy in a firm with less than 50 employees would be approximately $6,700. According to the Congressional Budget Office, under reform, the premium for an individual plan that pays for 70% of the cost of covered benefits policy will average $5,000–$1700 less.. 

What both conservatives and business owners such as Metz and Shattner do not understand is that many small businesses want to provide benefits. Recently, I was surprised to learn that, last year, 71% of firms with 10 to 24 employees offered health insurance. Employers understand that they, too, benefit when their workers have access to healthcare.  But small firms need the help that the Patient Protection and Affordable Care Act provides.

 

11 thoughts on “Can U.S. Businesses Afford Obamacare?

  1. Good for you, Maggie, to highlight the fact that large employers in the low-wage sectors can indeed afford to provide health insurance or pay a penalty. We should have had an employer mandate on them back in 1994, but they cleverly enlisted the NFIB to stir up trouble for the Clinton bill.

    The small business lobby does have one point in its favor — we do not expect any businesses to pay for the elementary education of the children of their employees.
    The children of Papa John’s get the same 12 free years of education as the children of Microsoft employees, and not all of the education that the Papa John’s kids receive is lousy by any means.

    We do this because education is funded through broad based property and income taxes. Now we cannot just snap our fingers and do this with health care, because the employer contributions by generous employers are so huge (close to $800 billion a year). But broader funding should still be our goal.

    I would just quibble over two items in your itemizations.

    The tax credit to small businesses has been a dud so far.
    Just to create a simple example, say that a business has ten employees. Assume that 5 of them have families and that some of them are older. Remember that this must be a fairly low wage business to even qualify.

    So the employer offers health insurance and says that they will pay half the premium. A head of household might have to pay $6000 a year just for their share. They will usually decline to participate.

    A tax credit of about $15,000 cannot overcome this problem.

    One other quibble.

    Paying for ACA by reducing the subsidy to hospitals for uncompensated care is just plain bad public policy. Granted it is just $36 billion, but even in its most optimistic versions the ACA will never eliminate all the uninsureds.
    Hospitals will still need those subsidies.

    • Bob–

      Good to hear from you.

      Yes, businesses that do large volume– not just fast-food chains, but discount retailers–
      could afford good health care for their employees if they raised prices just slightly (the Papa
      John’s example is a good one.)

      The ATlantic recently ran an excellent piece describing how large discount retailers could raise wages–to make them
      living wages– just by asking all of us to pay a little more for their inexpensive products. See http://www.theatlantic.com/business/archive/2012/11/whos-really-to-blame-for-the-wal-mart-strikes-the-american-consumer/265542/

      The math shows that if these Big Box retailers paid their associates $25,000 a year (this would be a Huge raise), it would
      cost the average person who shops regularly at these stores just $17.76 a year. Per shopping trip it would cost 50 cents.

      The same logic applies to how businesses that do large volume could afford healthcare–without anyone feeling too much pain.

      On the tax credit for small businesses: it hasn’t been a complete failure, but it hasn’t caught on as well or as quickly as many hoped. That is in large part, I think, because the rules are somewhat complicated and many people running Mom & Pop business don’t have the time to sit down and figure this out. But over the next year or two I expect that the word will spread.

      You’re right: if the employees are older and/or have children, they might well not be able to afford their share of the premium. But many small businesses employ many 20 somethings and 30 somethings—most of whom don’t have children. Here, I’m thinking of neighborhood restaurants– the waiters, cooks etc. tend to be young. (Even if they’re married, their spouse may well be able to get insurance where he or she works.) Also hairdressers, nail salons, small clothing stores, etc.
      As noted in the post, CBO estimates that the employees share of the premium would be only about $1700. For that price, a young woman would get free contraception, free OB/GYN visits, the knowledge that if she got pregnant, her pre-natal care and childbirth would be covered; if she thought she found a “lump” she could afford to go to a doctor; and that if she was in a car accident and spent 5 days in the hospital, she wouldn’t be wiped out. That’s a lot for $1700.

      And if you’re a 20-something or 30-something single mother, the policy wouldn’t be that much more expensive (kids are relatively cheap to cover) and having insurance for you and your child would be well worth $1700.

      On the fact that businesses are expected to help with their employee’s healthcare, but not the education of their employees children. Businesses get something in return when their employees are healthy: they are more productive at work, and there is less absenteeism. Also, of course, it’a an accident of history: during WW II employers were not allowed to raise wages, but they could offer benefits.
      That’s the system we now have, and while it would be better if health care were funded through income taxes, if we try to change it there is No Way that employers will raise wages by the amount that they now spend on health care. So we would just be giving U.S. corporations a huge present–at the expense of taxpayers.

      Our public schools are funded mainly by property taxes–which is why schools in poor cities and poor rural areas are so bad.

      Finally, the ACA does not do away with the subsidy for hospitals that care for a disproportionate number of poor people–it just lowers it in a very rational way. Especially with the expansion of Medicaid, hospitals will have much less unpaid debt.
      Also, the individual subsidies are generous enough that working people who are now uninsured will be able to afford insurance. Hospitals will still care for illegal immigrants (who aren’t eligible for help under the ACA) and a certain percentage of people who don’t buy insurance (though over time, as the word spreads,and the penalties rise, their numbers will dwindle.)

      Finally, while hospitals are always crying poverty, the majority actually make a profit on Medicare payments. And many make a fat profit on private insurance. Many private hospitals and academic medical centers also have huge endowments. This is how they can afford to build more marbled wings, install whirlpool baths, and pay many administrators multi-millions. They need to–and could–tighten their belts.
      The exceptions: public hospitals (you don’t find many marbled lobbies there) that actually do contribute to their communities and care for many Medicaid patients. (It’s hard to break even on Medicaid patients unless you have enough well-insured patients to support them. Small community hospitals in poor rural areas also are hurting.)

  2. Those hospitals in poor neighborhoods should get the $36 billion and then some. To push my education analogy further, a public school has enough money to operate on day one of each fiscal year. A public school does not need its pupils to be on the equivalent of Medicaid.
    Public hospitals should be fully funded on day one of each fiscal year.

    Two small points of clarification — I come from Minnesota and I served on a local school board in a poor district. Thanks to statewide income taxes and relative equalization of funding (which started with Hubert Humphrey), our local district with skimpy property taxes had perfectly decent schools. I may overestimate how much that applies in other states.

    and –

    I totally favor having small businesses offer health insurance, but absenteeism is not the reason.

    When I served on school boards, we had huge amounts of absenteeism among teachers with full health insurance.
    The reason of course is paid sick leave.

    When small businesses see an employee taking many days off, for good reasons or selfish ones, they generally let the person go. In a school or government job, the huge number of sick days threatens no one’s seniority.

    Health insurance is just the right thing to do. I am reminded of the arguments a few years ago that the uninsured were causing everyone else’s premiums to be $1200 higher. It was not true, but just lugged into the argument.

    • Bob–

      Starting with schools and school teachers.

      My daughter has been a teacher in NYC’s public schools for 10 years.
      For the first 5, she taught in a school where her students were extremely
      poor. (Quite a few lived in homeless shelters.)
      When she decided to get pregnant, she moved to another school.

      (There very high rate of miscarriages at her school as at many inner-city schools–
      Poor air quality is part of it. Windows don’t open Mouse droppings everywhere.
      Some rats. No air-conditioning in many classrooms. Stress is probably also a factor. )

      Now she teaches in a “mixed” school in Brooklyn– a combination of working-class and
      ;middle-class/upper-middle class.

      You suggest that at the beginning of the year, schools have the funding they need.
      Not true. At both schools, she buys books for her 1st grade students, and basic teaching supplies.
      At the first school she bought a clean large rug for her room–to cover the un–cleanable floor–
      and a copying machine. (The entire school had one Xerox machine and it was usually broken.)

      Schools in our most expensive neighborhoods do have the funding they need– though some of it is
      provided by the parents/PTA.

      City officials generally pretend that the schools in poor neighborhoods don’t exist.

      Based on 10 years experience, I will tell you that teachers do Not take sick days because they are
      paid for them. They’re Sick. Spend your days with young children that have weak immune systems,and you
      would find that you had strep throat, bronchitis, the flu, or simply a very bad cold quite frequently.
      Your feet would hurt. (Teachers don’t sit– they have to be on their feet all day to put up fires, keep the
      student’s attention, move from table to table for individual instruction.)

      She gets to school at 7:30 every morning and leaves at 3:30. Like many of her colleagues she works through
      her lunch break.

      Also– teachers in NYC’s schools haven’t had a contract for 4 years (the mayor refuses to negotiate.)

      What can I say “Minnesota Nice” is true. I believe you that most of the schools are reasonably good.
      But in many ways Minnesota is not typical of the U.S. The people who originally settled Minnesota have much more of a
      “communal” mindset–you could see that in farming practices, healthcare, etc. Traditionally, the state welcomes immigrants.
      What can I say? It’s the Un-Texas.

      Back to NYC schools: teachers also have No paid maternity leave. We are the only developed country in the world that does not require paid maternity leave–both in the private sector and in the public sector.

      Everyone–schoolteachers, workers in small businesses need paid sick days, not only to cover them when they are sick , but
      to cover them when their children are sick.

      To suggest that workers at small biz who take all of their sick days (or are absent more than others) should be fired is
      just not fair. Many are parents with young children. Many are single mothers.

      Finally,I agree we should have health insurance “because it’s the right thing to do”.

      But research shows that it also boosts productivity and reduces absenteeism. Other developed countries understand this-health insurance is good for business. -

  3. I totally favor higher labor standards, including sick leave for all workers and paid maternity leave. The costs could be covered by a slight increase in Social Security taxes, so that an individual business does not feel that hiring a young mother will cost them extra money.

    (California has a family leave law that moves in this direction.)

    I still think that universal taxes, whether sales taxes or income or payroll taxes, are a better bet for spreading health insurance. Trying to monitor millions of small businesses to be sure they offer health insurance is a massive and doomed task, when there are no unions to force compliance. Put it this way — if we want to make sure that waitresses and dishwashers have health insurance, then we should bring them onto Medicaid and raise taxes to do it.
    With a sales tax, the customers of the restaurant are in effect paying for the health insurance.

  4. Bob-

    If an employer refuses to hire a woman because she is a young mother, I believe that he could be sued for sex discrimination.
    In Europe, private sector employers are expected to act in ways that benefit society as a whole. That is why they are required to offer maternity benefits. Of course, this cost them $$. In most European countries laws are not set up to maximize the amount of money that business owners
    can accumulate. That is our definition of capitalism. (As a 19th century capitalist put it: “Capitalism is set up to make as few people as possible very, very rich.” (This is a rough paraphrase. Does anyone know the exact quote and/or source?)
    Funding healthcare through sales taxes is a bad idea because sales taxes are regressive. I agree that funding health care through progressive income taxes would be fine. But– we have already set up a system in which health care is partially funded by employers.
    How do we dismantle that?
    If we told employers that they no longer were expected to offer health insurance, they would never raise wages to a point that equaled the amount that they now invest in health benefits. Workers would be the losers. (Congress would never vote to raise corporate income taxes to levels that
    equaled what they now spend on health care.)
    Moreover: the idea of “shared responsibility” (the phrase used in the ACA) is, I think, a good one.
    The idea is that when it comes to health care, we’re all in the boat together.
    Employers, workers, the health care industry and society as a whole benefit when we all have access to health care.
    In this country, we built health insurance into employee benefits. Now, we’re trying to extend that to include more employers– including employers who run businesses based on a a low-wage/low or no benefit/ low prices for customers/ high profits for owners model.
    This is a model that guarantees high rates of poverty among working Americans.
    See this provocative article in the Atlantic–You may not agree, but I think you’ll find it very interesting. http://www.theatlantic.com/business/archive/2012/11/whos-really-to-blame-for-the-wal-mart-strikes-the-american-consumer/265542/#.ULBC6yFgx2o.twitter
    I really hope you’ll read it.

  5. Pingback: What Obamacare Means for Businesses: Facts vs. Fiction | Martinis at The Blue Max

  6. Pingback: Q. I work for a fast-food franchise and I’ve heard that many of these companies will cut hours for full-time workers so that they don’t have 50 full-time employees. Is this legal?

  7. Pingback: Q. I’ve heard that very small companies can get a small business tax credit. How do we qualify?

  8. What about the big companies? My daughter works at Lowe’s which doesn’t provide coverage but she could buy it for $300 a month. She can’t afford to buy it but works 39 hrs. a week. Will they cut the hours to 30?

    • Nancy–
      If the company does not provide “affordable comprehensive” insurance she will be able to buy her own insurance in the Exchanges where she will almost certainly be eligible for a subsidy that will help her cover her premiums.
      From what you say, the insurance that Loews’ offers is probably not up to the standards of “affordable comprehensive.”
      This means that if she goes to the Exchange, buys her own insurance, and receives a subsidy, Loews will have to pay a penalty (this will be Loews’ contribution toward her subsidy.)(
      Loews might try to avoid the penaly by cutting her to part-time, but we have already seen consumers threatening to boycott large companies like Loews’ that talk about cutting employees to part-time.
      Loews is a profitable company– we are not talking about a small, Mom & Pop business that truly cannot afford insurance for its employees. (Most of those businesses will not be subject to a penalty and may be eligible for subsidies themsleves to help them cover workers.)
      Americans are tired of large profitable companies that under-pay their workers and don’t provide good insurance benefits– while other, more reponsible, companies do. This is why I think that those companies that
      try cutting employees to part-time will experience serious back-lash.

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