Fix Health Care Policy

Obamacare at Three Years: Failing Small Businesses

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One of Obamacare’s many failures is the temporary small business tax credit, which is intended to encourage small employers to offer health insurance to their employees by partially offsetting the cost. Thus far it has largely failed to do so.

Initially, the IRS estimated that 4.4 million taxpayers could have been eligible for the credit. As J. Russell George, Treasury Inspector General for Tax Administration, testified before Congress, “The IRS mailed approximately 4.4 million postcards at a reported cost of approximately $1 million, with basic information on the Credit to businesses that could be affected.”

But even after spending $1 million to advertise the credit, only 7 percent of potentially eligible employers claimed it. As George testified: “[T]hrough mid-October 2011, the IRS reported that 309,000 taxpayers…had claimed the Credit for a total amount of $416 million. This is substantially lower than the Congressional Budget Office estimate that taxpayers would claim up to $2 billion of Credit for Tax Year 2010.”

Read the rest on The Foundry…

Tags: congress, costs, crushing rules, employer mandate, small business tax credit, small employers, subsidies

Obamacare’s Burden on Businesses

Obamacare is approaching its three-year anniversary next week. And while it’s having an impact on nearly all Americans in one way or another, businesses are facing some of the biggest challenges related to the law.

Heritage hosted a panel Monday to examine the implications of the Affordable Care Act. Robert Graboyes, a senior fellow for health and economics at the National Federation of Independent Business Research Foundation, explained the three options employers face with Obamacare: stunt business growth, shrink employee hours, or minimize the damage the mandate does on the employer’s wallet.

That’s the case for Mike Ruffer, who works in restaurant business. Ruffer purchased the franchise rights from Five Guys in 2004 with a commitment to build 11 restaurants. Ruffer owns eight Five Guys in North Carolina, but worries about opening new restaurants because of the uncertainty related to impending federal regulations.

Read the rest on The Foundry…

Tags: businesses, employer mandate, fines, impact, job loss, ObamaCare, stunted growth

10 Stories of Job Loss as Consequences of Obamacare

As employers and businesses prepare for Obamacare’s sweeping changes and mandates to begin in 2014, many are already laying off some of their employees. An event at Heritage today will discuss the burdens of the law both for small businesses’ ability to hire and grow and individuals’ ability to find jobs. Here are 10 examples of job loss due in whole or part to Obamacare and its consequences:

Medical Device Tax

1. 1,000 jobs lost: “Stryker Corporation Confirms Obamacare Layoffs.”
2. 275 jobs lost: “Medical Device Tax Blamed for Welch Allyn Layoffs.”
3. 100 jobs lost: “Latest Obamacare Casualty: 100 Workers at Smith and Nephew.”

The 2.3 percent excise tax on the sale of medical devices, one of the 18 tax hikes in Obamacare, is estimated to cost the industry over $29 billion between 2013 and 2022. Many employers in the industry are compensating for the tax hike by reducing their labor costs.

Medicare Payment Cuts

1. 950 jobs lost: “Wake Forest Baptist Medical Center Reengineers Cost Structure, Eliminate Positions.”
2. Up to 400 jobs lost: “Orlando Health to Cut Record Number of Jobs to Save Money.”
3. 52 Jobs lost: “Delaware Hospice Lays Off 52 Workers amid Federal Changes.”
4. 58 jobs lost: “Hospital Layoffs and the Affordable Hea[l]th Care Act.”

Read the rest on The Foundry…

Tags: employer mandate, job loss, Medical device tax, Medicare payment cuts, ObamaCare

12 Days of Obamacare Surprises: Increased Employer Penalties

Not all surprises are good. When it comes to Obamacare, the original projections are turning into unfortunately different realities. For the next four days, Heritage is going to highlight one of the various changes in Obamacare projections (e.g., cost, enrollment, etc.) from when the law first passed until now.

In 2014, Obamacare requires all businesses with 50 or more full-time employees to provide government-approved health coverage for their workers or pay a $2,000 penalty for each employee after the first 30 workers.

In 2010, the Congressional Budget Office (CBO) estimated that total penalties paid by employers from 2010–2019 would equal $52 billion.

In 2012, the CBO updated its estimate for penalties paid by employers from 2013–2022 to total $106 billion.

Surprise: Employers are now estimated to pay more than twice the amount in penalties compared to the original estimate. Too bad employers won’t be able to re-gift Obamacare’s mandate.

12 Days of Obamacare Surprises:

8. More cuts to Medicare…

7. Loss of employer-sponsored insurance…

6. A 50/50 split on enrollment estimates…

5. More uninsured Americans…

4. Increased exchange subsidies…

3. Big tax increases…

2. The small business tax credit…

1. And the individual mandate.

Tags: CBO, employer mandate, Obamacare surprise, penalties

Businesses Cutting Hours, Bracing for Costs of Obamacare

It seems that every day now brings another business owner in the news talking about cutting workers’ hours or making other cost-cutting moves in anticipation of Obamacare’s impact in 2013.

Here are just a few of the business owners’ comments on the health care law:

• “We’ve calculated it will [cost] some millions of dollars across our system. So what does that say—that says we won’t build more restaurants. We won’t hire more people,” Zane Tankel, chairman and CEO of Apple-Metro, which runs 40 Applebee’s restaurants. >> Tweet this quote
• “There’s no other way we can survive it, because we think it will cost us 50 cents a sandwich. That’s just the actual cost. If you have 40 or 50 employees at a restaurant, and the penalty is $2,000, and you’re going to pay $80,000 or $100,000 penalty, there goes the profit in your restaurant.”—Jimmy John Liautaud, founder of Jimmy John’s subs, who said he was considering cutting workers’ hours to come in under the Obamacare mandate threshold. >> Tweet this quote
• “It’s a great concept. We want to have everyone insured. The problem is, who is going to pay for it and how are we going to accomplish this?” — John Metz, who operates roughly 40 Denny’s locations and five Hurricane Grill & Wings franchises in Florida, Virginia, and Georgia, and has said he may have to add an Obamacare surcharge to his menus. >> Tweet this quote
• “New unit construction will cease if we have to allocate moneys for that construction to the [Affordable Care Act]. And building new restaurants is how we create jobs.” — Andy Puzder, CEO of CKE Restaurants, which owns Hardee’s and Carl’s Jr.

Heritage’s Alyene Senger explains that these businesses are responding to Obamacare’s employer mandate, which has a job-killing effect:

Obamacare requires all businesses with 50 or more full-time employees to provide health coverage for their workers or pay a $2,000 penalty for each employee after the first 30 workers. The employer mandate creates incentives for businesses to avoid higher costs by, for example, hiring part-time employees instead of full-time employees, since businesses will not be penalized for failing to provide health insurance to part-time employees….Businesses can also avoid penalties by keeping the number of employees under the mandate threshold of 50, which further discourages creating new jobs.

These businesses’ plans are only the effects based on what we know about Obamacare. There are still many, many crucial details that we don’t know. Health and Human Services (HHS) just released some of the new rules that will govern what kind of coverage insurers must offer —and Heritage’s experts are still going through the 300-plus pages of regulations to sort out what they mean.

Read the rest on The Foundry…

Tags: businesses, cutting worker hours, employer mandate, higher costs, ObamaCare, regulations

Obamacare’s 18 New Tax Hikes

Not only did the President and his partners in Congress take $716 billion out of Medicare to pay for Obamacare, but they also raise taxes by $836.3 billion to pay for it, with $36.3 billion hitting Americans in 2013 alone. Here’s the Congressional Budget Office (CBO) and Joint Committee on Taxation‘s (JCT) updated cost of the Obamacare tax hikes and penalties.

To read about more of Obamacare’s negative effects, click here.

Tags: Cadillac tax, Congressional Budget Office, employer mandate, Individual Mandate, Joint Committee on Taxation, Medicare cuts, ObamaCare, tanning tax, tax hikes

Huge Number of Businesses to Drop Health Insurance, Thanks to Obamacare

Experts have warned that Obamacare’s new subsidy program could cause a mass exodus of businesses out of employer-sponsored insurance. New research from McKinsey and Company based on a survey of employers reinforces this concern.

According to their findings, 30 percent of employers said they would definitely or probably stop offering insurance once the law’s main provisions go into effect in 2014. The inclination to dump coverage exceeded 50 percent once employers’ understanding of the law’s effects increased.

Obamacare encourages employers to dump coverage on two fronts. First, several provisions will increase the cost of employer-sponsored insurance (ESI), including new insurance requirements and mandates, and a tax on high-cost health plans. Employers who don’t offer a minimum level of coverage deemed essential by the federal government will face a penalty of $2,000 per worker, but as the authors point out, Obamacare’s other “requirements will increase medical costs for many companies. It’s important to note that the penalty for not offering coverage is set significantly below these costs.”  (Read the rest on The Foundry…)

Tags: drop coverage, employer mandate, high-cost health plans, insurance regulations, McKinsey & Co., ObamaCare

Sen. Hatch Calls for Repeal of Obamacare Mandates

“I’ve been working to dismantle Obamacare,” declared Sen. Orrin Hatch (R-UT). “We have to fight this terrible law that’s a threat to liberty itself.”

These comments came during a June 21^st blogger conference call held by Sen. Hatch in which he sought to rally support for two bills aimed at representing “a strategic attack on the central tenants of Obamacare.”

The American Liberty Restoration Act (S. 3502) would strike forthcoming individual mandates from the current law, while the American Job Protection Act (S.3501) would repeal what Hatch calls, a “job-killing employer mandate.”

Individual and employer mandates represent two of the most focused-upon issues on which Americans are challenging both the effectiveness and constitutionality of the health care law, signed by President Barack Obama in March. Indeed, Hatch cited that “there are now 20 states, including Utah, challenging this which the President signed into law.” (more…)

Tags: employer mandate, job killer, ObamaCare, repeal, unconstitutional

Side Effects: Obamacare Creates a Costly Drop in Employer Health Coverage

The President repeatedly promised that if you liked your health plan, you would be able to keep it. Nothing would change. Fat chance.

In fact, millions of Americans of Americans will lose or be transitioned out of their existing employer based health insurance. The official Actuary at HHS- who doesn’t speak for the Administration- said it would be 14 million. But a new report by former Director of the Congressional Budget Office Douglas Holtz-Eakin predicts it could be as high as 35 million. That kind of disruption comes at a high price: It’ll cost taxpayers nearly $1 trillion more than previously estimated.

Why? Because Obamacare calls for lavish subsidies to help low- and middle-income Americans buy health insurance. Indeed, households earning up to four times the federal poverty level are eligible for subsidies. According to 2008 Census data, some 127 million Americans would qualify. Yet the official CBO analysis of Obamacare estimated only 19 million would get subsidies. (more…)

Tags: Congressional Budget Office, employer mandate, firewall provision, Side Effects, subsidies, tax penalties