Obamacare’s Real Costs

Now Obamacare’s devastating financial effects are coming to the fore. They can be seen in the rising costs of health insurance, layoffs, cuts in employment hours, rising prices and looming tax hikes. Obamacare will send unemployment numbers skyrocketing and force workers — who find their hours cut back below the “full-time” threshold of 30 hours — to try to find multiple part-time jobs to make ends meet. Or they’ll give up working altogether and join the rising numbers of wards of the state: 49.7 million in poverty, non-farm employment at 2005 levels, 46.7 million on food stamps and 9 million leaving the workforce and joining the disability roles. The Congressional Budget Office predicts Obamacare will cost 800,000 jobs by 2020-2021. It will be much worse than that.

With jobless numbers already high and manufacturing and mid-level white collar professional service jobs leaving the United States never to return, most new jobs come in the healthcare, social assistance (ambulatory healthcare services) and food service industries (waiting tables and tending bar).

But the medical device and food service industries are being hit hardest by Obamacare, as business owners seek ways to remain profitable and competitive once the provisions kick in.

During the International Franchise Association convention in Washington, D.C., in September, franchisers learned just how hard Obamacare would hit them. David Barr, a Taco Bell and Kentucky Fried Chicken franchiser, told the group how Obamacare will cut his profits and probably theirs as well — in half. Their only choice is to slash employee hours so they aren’t eligible for company-paid health insurance or stop offering insurance and pay the $2,000 per employee fine.

Barr has 23 stores with 421 employees, 109 of whom are full-time. Of those, he provides health insurance to 30. His total cost is $129,000 per year and his employees pay $995. Under Obamacare, he’ll have to provide health insurance for all 109 full-time employees at a cost of $444,000 per year. The $315,000 increase is more than half his annual profit, after expenses. If he chose the fine instead, his healthcare costs would still increase by $89,000 per year.

Darden Foods, the world’s largest casual dining company — it includes Olive Garden, Red Lobster and LongHorn Steakhouse — was one of the first to announce it would be limiting worker hours to avoid healthcare requirements. Papa John’s CEO John Schnatter said the cost of his pizzas will rise between 11 and 14 cents and worker hours will be reduced. He expects the law to cost his company between $5 million and $8 million annually.

In July, McDonalds Chief Financial Officer Peter Benson said Obamacare will cost his company $420 million in new healthcare costs even though the company received a waiver from the Administration of Barack Obama. His menu prices will increase as a result.

Florida-based restaurant owner John Metz, who owns 40 Denny’s restaurants and the Hurricane Grill & Wings franchise, said last week he would be tacking a 5 percent Obamacare surcharge on his meals and reduce employee hours. He says it is “the only alternative. I’ve got to pass the cost to the customer.”

Look for other restaurants faced with a choice of becoming unprofitable by absorbing the costs or uncompetitive by raising their menu prices if they insure their employees and pass the cost to consumers to also cut worker hours.

Wal-Mart recently raised its health insurance premiums as much as 36 percent, putting coverage out of the reach of many of its employees. Its executives say employee hours will be cut. Likewise, the Kroger grocery chain is also reducing employee hours.

Other companies that have announced Obamacare layoffs include:

• Welch Allyn: A medical diagnostic equipment manufacturer, Welch Allyn will lay off 250 employees, or 10 percent of its workforce, over the next three years because of the Medical Device Tax mandated by the law.

• Dana Holding Corp.: A global auto parts manufacturer, Dana Holding Corp. will cut its workforce of 25,500, citing $24 million in additional healthcare expenses over the next six years.

• Stryker: One of the biggest medical device manufacturers in the world, Stryker will close its Orchard Park, N.Y., facility, eliminating 96 jobs in December. The company will also eliminate about 5 percent of its remaining workforce — about 1,170 workers.

• Boston Scientific: CEO Ray Elliot recently announced that Obamacare taxes will force him to lay off between 1,200 and 1,400 workers and shift investments and jobs to China.

• Medtronic: The medical device maker cut 500 jobs this past summer and will eliminate another 500 in 2013 because of Obamacare taxes.

• Smith & Nephew: 770 layoffs.

• Abbott Laboratories: 700 layoffs.

• Covidien: 595 layoffs.

• Kinetic Concepts: 427 layoffs.

• St. Jude Medical: 300 layoffs.

• Hill-Rom: 200 layoffs.

And then there are the looming taxes.

Read more here: http://personalliberty.com/2012/11/19/obamacares-real-costs/