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:

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The Post-Election Edition of Health Wonk Review

This most recent edition of HWR, a compendium of some of the best health care posts of the past two weeks, came out ten days ago. I apologize that I’ve been tardy in commenting— but, not to worry, it’s an “evergreen.” The problems Health-Wonkers raise haven’t been solved in the past week, and the issues discussed remain just as “hot”– as they were.

Managed Care Matters” Joe Paduda does an outstanding job of hosting the round-up in a post titled: “Elections Have Consequences.”

He begins with “Health Policy and MarketPlace Review’s”  Bob Laszewski, who  notes in the wake of the election, we can be certain of one thing: Obamacare will be implemented. To be sure, there will be lawsuits challenging reform legislation, but Laszewski says, “I wouldn’t waste a lot of time worrying about those. Anyone in the market will do better spending their time getting ready for all of the change coming.” He’s far more worried about whether the government will be able to set up the Exchanges in time to meet the deadline—and how legislators are going to solve the “fiscal cliff” problem.

Writing on “Health Affairs” Timothy Jost agrees that “there is a great deal of work needs to be done before reform becomes a reality.”  He focuses on the many rules that the administration will need to issue to provide guidance to the states, to employers and to insurers:  “The exchanges must begin open enrollment on October 1, 2013,” he observes. “By that date, the exchanges must have certified qualified health plans.  But before health plans can be certified, they must have their rates and forms approved by the states.  And before that can happen, insurers must determine what plans they will offer and what premiums they will charge.  Yet insurers cannot establish their plans and set their rates until they know a lot more than they do now about the rules they are going to have to play by.” In other words, the administration had better “roll up its sleeves and get to work.”

Meanwhile, President Obama still must contend with ornery governors, and rebellious states. “In an ominous sign,” Jost notes, “Missouri passed a ballot initiative prohibiting state officials from cooperating with the federal exchange in its state,  and authorizing private lawsuits against any official who cooperates.”   (Thanks, Missouri–just what we need, lawsuits against officials trying to do their jobs..)  “Whether this is constitutional remains to be seen,” says Jost, who is a constitutional expert.

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A Centrist Perspective: Makers and Takers, Obamacare, and the Path Forward

Below, a guest post from Stephen Reid, Managing Partner at Pharmspective, a market research firm that provides advisory services to healthcare and pharmaceutical companies on strategic issues including the Affordable Care Act. (ACA)

I don’t  agree with Reid on every point. (For example, if Republicans take both the White House and the Senate, I believe that they could and would eliminate both the premium subsidies that will make insurance affordable for middle-class Americans and the mandate.) Nevertheless, when he sent his Op-ed to me I was impressed by how well he understands the legislation. A great many moderates have been confused by the arguments coming at them both from the left and from the right.  A combination of misinformation, half-truths and fear-mongering has created so much “noise” that it has become extremely difficult to separate fact from fiction.

By contrast, Reid does a very good  job of explaining the reasoning behind the Affordable Care Act, and how its “checks and balances” work. I agree with him that the legislation is far from perfect, but it represents a good beginning.

 There is just one major aspect of reform that I think Reid doesn’t understand: the rationale for expanding Medicaid. See my note at the end of his post.

                   A Centrist Perspective: Makers, Takers and Obamacare

by Stephen Reid

With a few days left before we elect a president, the prevailing belief is that an Obama win would propel the Affordable Care Act (ACA) forward with little delay and a Romney win would kill it. Both parties have gone to great lengths to characterize healthcare reform; the Democrats tout the legislation as essential to addressing a broken healthcare system that results in the U.S. spending twice as much as most developed countries on healthcare while leaving 50 million people without coverage; the Republicans cite the ACA as an example of hopeless dependency on government and contrary to free-market principles and individual rights.

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