Obamacare, officially known as the “Affordable Care Act”, is quickly proving to be so unaffordable that neither businesses nor labor unions want anything to do with it.
In increasing numbers, US business complain about ‘Obamacare’ costs (but they are not the only ones).
David Dillon, chief executive of the Kroger supermarket chain, told the Financial Times that some companies might opt to pay a government-mandated penalty for not providing insurance because it was cheaper than the cost of coverage.
Nigel Travis, head of Dunkin’ Brands, said his doughnut chain was lobbying to change the definition of “full-time” employees eligible for coverage from those working at least 30 hours a week to 40 hours a week.
Some restaurants, including Wendy’s and Taco Bell franchises, have explored slashing worker hours so fewer employees qualify for health insurance, arguing that they cannot afford the additional healthcare costs. Other businesses are deliberately keeping headcounts below 50.
The penalty for not providing coverage is $2,000 per worker. According to the Kaiser Family Foundation, a non-partisan policy group, the average annual cost to employers of insurance is $4,664 for a single worker and $11,429 for a family.
Companies with more than 50 workers have to pay a penalty if they do not provide full-time employees with health insurance. The employees can instead buy private coverage subsidized by the government on new insurance exchanges.
Not Even Labor Unions Want It
If it’s costly for businesses, labor unions must like it. Right? Wrong.
The Washington Time reports Labor unions that pushed Obamacare through want out
Unions, or rather the professional class of union leaders, were vehement supporters of Obamacare’s federal takeover of health care. Now that they’ve had a chance to actually read the 2,801-page bill and “find out what is in it,” they are upset and want out.
Major unions like the AFL-CIO and the Teamsters are now demanding that they be allowed to stay on their current health care plans and receive government subsidies to cover the increased costs some of Obamacare’s provisions will impose on lower-income workers. They want to eat their government cake and have it too. What else is new? Who would foot the bill? You guessed it: We, the taxpayers.
The rank hypocrisy of Obamacare-backing unions began almost immediately after the passage of the bill three years ago, with hundreds of thousands of union workers being exempted from the law through waivers from the Obama administration.
In total, more than 1,200 entities were granted waivers from President Obama‘s signature legislation, the vast majority of them labor unions. In fact, unions representing 543,812 workers received waivers, while only 69,813 employees at private firms, many of them small businesses, managed to secure a waiver.
The same unions that fought tooth and nail to impose this program on all Americans used million-dollar lobbyists to make sure they didn’t have to play by the same rules as the rest of us.
Readers will recall Mr. Obama’s constant mantra: “If you like your health care, you can keep it.” Not so. According to the Congressional Budget Office, more than 7 million Americans will lose their employer-based insurance thanks to Obamacare. Unintended consequences always come back to haunt us, and try though they might, government actors are incapable of overturning economic law by mere decree.
Job Market Distortions
I have commented on the labor market distortions of Obamacare many times.
Here is a brief recap: Since the “Unaffordable Care Act” defines full-time employment at 30 hours, many businesses are cutting back the number of hours employees can work to 25. In turn, this led to more hiring, all part-time jobs of course. Some medium-sized businesses reduced employment to under 50 workers and other businesses turned to consultants to get around the act.
Now businesses are investigating opting out of the plan even for full-time employees. Other than social pressures and disgruntled employees, why not?
Arguably, every business should opt out and pay the penalty. Businesses could even give a nice subsidy to its employees and come out ahead. Let voters see for themselves just how “affordable” Obamacare is.
As a primary benefit, if enough businesses do opt out, there will be massive voter support to scrap or at least overhaul the program.
About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.