Affordable Care Act: Anything but Affordable
The Affordable Care Act is a piece of legislation that aims to extend healthcare coverage to millions of Americans. This bill has divided the nation and in some circles discussions end in bitter arguments. Those that support the bill feel it is the nation’s moral duty to grant everybody coverage, and many of those that oppose the bill are alarmed at the fiscal implications it brings. The Affordable Care Act was summarized by Avik Roy as follows: Some will be signed up for Medicaid and consigned to a lifetime of poor health care. Some will gain access to the subsidized exchanges, but will find it harder to gain employment as a result. And those who already have insurance, and are being squeezed by ever-increasing premiums, will be squeezed even harder by the law’s thoughtless blizzard of mandates and regulations (Roy, “How Obamacare Harms the Poor”).
The intentions of the Affordable Care Act are respectable, but the end result will disadvantage citizens that pay for their own health insurance and will impact small businesses and their employees on a greater scale than the rest of the population.
Under the Affordable Care Act, businesses with 50 or more employees are required to offer health insurance that meets government regulations to employees or face a fine of $2,000 per employee, minus the first 30 employees. In other words, a firm with 50 employees that fails to offer health insurance will be fined $40,000 and a firm with 100 employees would be fined $140,000 each year (“Obamacare Will Crush Small Businesses”). Businesses that currently offer health insurance to employees and firms looking to start offering health insurance in order to comply with the law will see a sharp increase in the cost of health insurance premiums. Employees of David Barr, who owns 23 Taco Bell and KFC locations in Alabama and Georgia, “likely will see little change in their coverage.” Barr Said, “[But] our premiums will go up significantly. They’ll probably almost double. We’re paying for it no matter how much they call it ‘affordable’” (Miller, “Businesses Fearful”). Barr currently “provides health insurance for only 30 managers or office personnel. But under the ACA’s rules, starting in 2014, he will have to extend insurance coverage to an additional 134 full-time employees among his 424 workers.” Barr says, “By any definition, the law applies to us. If we fully implement the law, we’ll have to just file for bankruptcy.” Barr calculates that at an average cost of $5,000 per year it would cost his company about one half-million dollars per year to cover the applicable employees, even if his employees were paying the maximum percentage of their premium. Barr continues, “this business, believe it or not, does not cash flow more than half a million dollars a year. After I pay all my expenses, pay debt service, pay required upgrades and other capital expenditures required to run the business, we don’t have half a million dollars a year. And I really believe that’s the case for many low-wage service industries” (“Fast Food”). Faced with higher costs, many companies, unable to meet those costs will be faced with paying fines or finding a way to skirt the law. Many employers are contemplating reducing full-time employee’s hours to below 30 hours, turning them into part-time employees which the companies would not be required to offer health insurance. Barr is planning on reducing, “a majority of his 164 full-time employees” to part-time hours. Barr says, “The unfortunate part is it doesn’t help me, because I’m probably losing a good employee. And it doesn’t help my employees, because they might end up taking two part-time jobs and they still won’t have [employer-provided] insurance” (“Fast Food”). Barr is not alone in his decision to cut hours. Zane Tankel, an Applebee’s restaurant franchisee “told Fox News Business Network he would freeze hiring and may cut employees’ hours because of the cost of...
Cited: Chartier, Jeanine. Personal Interview. 3 Dec, 2012.
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