Is Obamacare causing layoffs?

Of course Obamacare is going to cause layoffs and shifts to part-time work. It raises the cost of health care coverage to businesses, and in some cases quite substantially. You guys are in complete denial as to the effect of this law, and you don’t want to admit that it might affect the economy adversely, so you’re just assuming that evil businessmen are taking advantage of this law to do evil things to their employees.

The hardest-hit industries are those that have small white-collar office staffs with health care, and much larger, low-paid service workers who either get minimal coverage or no coverage at all. Fast food chains are a perfect example of this.

Franchises warn that Obamacare could halve profits

Because health insurance costs a lot more than the penalties, a lot of businesses are going to opt for the penalties and drop their employee’s health insurance entirely. I mentioned this repeatedly back during the original Obamacare debates, and thought it was such a gaping loophole in the law that it must have been intentional - a backdoor way to get to single payer over time.

And if you think it’s just those evil businessmen…
Health care law brings double dose of trouble for part-time professors

Really people… Instead of just denying that this is happening, why don’t you just take the extraordinary step of googling “Obamacare layoffs”? There are plenty of stories out there, and from reputable sources.

Michigan company plans Obamacare layoffs

This set of layoffs isn’t due to health insurance coverage requirements, but to an astoundingly stupid part of the plan: part of the revenue raised to offset the cost of Obamacare comes from a new tax on medical device manufacturers. Got that? To help lower the cost of health care, the government is putting a new tax on the companies that provide health care services. Only the federal government could be this stupid. Last year another medical device manufacturer moved its operations out of the country because of the tax.

The additional costs of Obamacare are not trivial. One franchise said that its accountants estimate that Obamacare will result in a cost increase of $72,000 per year per location. Trust me - as someone who has been involved with a franchise in the past, $72,000 per year is often more than the franchise owner earns. Many of these franchises will go through flips and twists to avoid this, even if it means laying off employees, switching to part-time workers only, or investing in automation.

Consider this: A minimum-wage full-time employee in the U.S. earns about $13, 000 per year. Providing health insurance coverage for that person amounts to a 50% pay increase. There is no way businesses can absorb that. So they’re going to pay the penalty instead, but even that amounts to a 15% pay increase. That means that any worker whose is on the marginal productivity line is at risk of being laid off or converted into a part-time worker.

This is just the tip of the iceberg. A lot of the health care act hasn’t even been written into final legislation yet by the bureaucracy. Wait until the end of the first year of implementation, and then we’ll see just how much damage it’s done.

A tip of the iceberg?

The way I see it we do have to indeed wait for the implementation of the law instead of being chicken little, specially when, as pointed before, the reality is that the costs were rising even before the reforms are in place.

So, looking once again at the irrational (there is no other way to put this) increases in medical care costs in the USA, it is very illogical to not realize that the back of the camel was going to break soon, and reform was the only way forward. IMHO the back was breaking already and one big factor (as I noticed in the previous discussions) was that health care costs also have been a drag in creating new jobs. I do have to blame big companies for not being more proactive in telling the American politicians that were in their pockets to do a better job in controlling health care costs, unfortunately the job they have been very active was to continue to increase the profits of many like the pharmaceutical industry, so we got the ACA as a result of not having any other good plans coming from the Republicans.

I would be there are people getting laid off, but so what? I know darn well the company I worked for used 9-11 to lay off people as an excuse to clean out the dead wood. There was no need to do that. We had a slight business loss, but not only did we recover, by the end of Oct 2001, we made up all the lost business.

I think businesses see this as an opportunity to trim the deadwood in companies.

Having been out of work for awhile, I’ve worked a lot, I mean a lot of part time jobs over the last year and as much as I hate to say it, there is so much deadwood.

People, I think you’re grossly overestimating the PR aspect of layoffs, if that’s what people mean by “businesses will just use this as an excuse.” Businesses by and large don’t need an excuse. If laying off people produces a strong benefit, they lay people off.

I agree with Sam (already did). It would defy basic economic principles to assume there won’t layoffs resulting from this law, as it’s defined. It would be akin to saying that demand for something will increase if you raise the price. That’s not how it works. If you set thresholds that determine material costs, businesses will find ways to not hit those thresholds if they can. It is predictable.

In fact, businesses don’t like laying people off - it’s bad for morale, and it’s unpleasant for the managers. The best explanation for why they waited until after the election is that they were holding out hope that Romney would be elected and the law would be either repealed or heavily modified. Those layoff plans were probably sitting in a folder titled, “Implement if Obama wins.”

The real bottom line here is that Obamacare is a massive tax increase on businesses employing over 50 people. But it’s actually worse than a tax increase, because taxes only kick in if you make an actual profit. This is an increase in before-profit costs, which really raises the risk factor for businesses.

Gigobuster’s link is highly misleading in that it looks at the size of the new regulatory burden as compared to the entire economy, and therefore concludes that it will have minimal impact. But that’s not the way to look at this, because the effect of the taxes and regulations are not distributed evenly across the economy.

In particular, there are large swaths of businesses that won’t be affected at all. Those that already have ‘gold-plated’ insurance plans will see no change. Businesses that mostly hire college-educated white collar professionals will not be greatly impacted, because they generally already provide good health insurance coverage.

Where you have to look is at that portion of the economy that hires low-paid, low-skilled workers who typically do not have health care coverage now or who have cheaper plans that will not pass muster when compared to the exchanges. We’re talking about the service industry: Small chain stores, large franchises, etc. Radio Shack, Target, McDonald’s, Wal-Mart, etc. These are the companies who are most responsible for the jobs created in the past 15 years, and they’ll be the ones responsible for the most job losses due to Obamacare.

Again, the people who will be hardest hit will be poorer workers who this law was ostensibly supposed to help. Many of them are going to see what little health care coverage they have through their employers dropped completely. Then they’ll be facing fines that start at about $800/yr and go up to $2,000/yr for not having coverage. For some who can’t afford the coverage available through the exchanges, the net result of Obamacare will be that they not only lose whatever insurance they have now, but they’ll also have to pay the fine for not having health insurance.

Other workers are going to to find their full-time positions reduced to part-time. Employers don’t have to pay for health care if a person works less than 30 hours per week, so you’re going to see a lot of jobs with 28 hour work weeks in the future. These people face a triple whammy: They lose income, they lose their employer health care, AND they have to pay a fine because they no longer have health care. A lot of them will wind up having to work two part-time jobs to make ends meet, and they still won’t have health coverage.

The third group of people will be those who are simply layed off because of the law. The good news for them, if you want to call it that, is that they’ll get their health care through Medicaid. But they’ll be unemployable.

Finally, there’s another major effect on job creation that is totally unseen: Businesses that have fewer than 50 employees now have a disincentive to expand. I imagine we’ll also see a lot of ‘creative’ avoidance. For example, if you have a chain of 10 stores that hires 500 people in total, it’s going to be awfully tempting to restructure so that each store is its own separate business, and they’ll be tied together through licensing fees, consulting fees, or whatever. It will be less efficient, and slow the growth of the economy, but it will be cheaper for the business owners. And they are the ones who make the decisions.

My understanding is that those who can’t afford coverage receive subsidized coverage. This invites the question of how the subsidies are paid for, of course, but in any case obviates the claim that people who lose hours or jobs because of ACA will be fined for not having insurance.

Of course it is predictable, even in the cite I referred to the economists already expected some layoffs to come, the conclusion is that this is not going to lead of the sinking of the economy ship, the chicken little part is in assuming that there is an avalanche (Tip of the iceberg) of layoffs coming because of this.

The main reason still remains the rising costs of health care, and some asshole PR people that want to put the blame on the attempt at controlling the rising price beast.

And no sooner you accuse sources of being misleading that you reach for sources with true misleading points, people paying the fine will get health insurance, and the ones that can not pay will also have subsidies to help.

^ Must be the least Canadian ‘Canadian’ in the history of … Canada; how anyone can experience UHC and post in defense of the US model is … beyond belief. Literally.

The USA healthcare model is a ludicrous ripoff of working people, and the most successful con (‘socialized medicine’ LOL) of the capitalist era - bigger than the cigarette/nicotine con, better than the Wall Street con: beautiful marketing to wrap it up in the flag!

And besides it just got approval of the Supreme Court and the electorate. Merry Christmas!

Indeed BrokenBriton, the sad reality is that to make some of the opposition points to work in the real world one would have to ignore the big elephant of the insane costs that appeared with no Obamacare in place, and also ignore that the elephants in congress still think it is a good idea to continue with this rip-off old system.

The U.S. health care system and Obamacare have nothing in common with the Canadian system. For example, Canada’s health act is about 6 pages long. Obamacare is over 2,000 pages. Canada almost completely relegates implementation details to the individual provinces. Obamacare is an attempt to micro-manage health care across the entire country from a central authority. Bad idea.

In addition, Canada doesn’t pay for as much health coverage as you’d think. For example, prescription drugs are not covered at all by our public health care system. If I didn’t have private health care insurance through my employer, my family would be paying over $2,000/mo for our prescription drugs.

In fact, the U.S. government already pays more per person for health care than does the Canadian government.

Lol. Usa! Usa!

Claiming that there is micro-management is also reaching for a very ridiculous point, the solution was compromised thanks to the fierce opposition to make it a better system, and not only Republicans, but some Democrats also prevented that.

In the end there is no micromanagement, but even though this cite only implies it, the reality is that, once again, that micromanagement could had been better (as in: we should had gotten a more efficient government health care system)

(this cite is used only to point out that other conservative sources do not reach for misleading points.)

Really? Mother Jones is your cite? I take it you won’t complain if I post a counter-cite from the CATO Institute or the American Enterprise Institute?

How exactly will people paying the fine get health insurance? Yes, there will be subsidies for poor people. Hopefully, the law will be such that the difference between the subsidies and the penalty will be zero (i.e. the cost of health insurance with the subsidies will be about the same as the penalty, so people will opt for health insurance). But that still means people will be out of pocket by at least the amount of the penalty for their health insurance. It HAS to be that way, or the penalty would be meaningless as an incentive.

That means, of course, that poor people who today don’t have health coverage will be coughing up at least $800 per person next year. This may not sound like a lot, but it will be a real burden on low income families. You could argue that they’re free-riding now and it’s only fair that they pay, and that would be true, but it doesn’t change the fact that they are now going to have to cough up a significant portion of their disposable income for health insurance.

I’ll make a prediction: As this law comes into effect, you’re going to read many stories about the negative unintended consequences and the people who are hit hard by these regulations. There will be more layoffs, many people avoiding the payment of the penalty, etc. The result will be that the Democrats will ‘correct’ this by adding more subsidies and exemptions and complications to the act, and they’ll pay for it by raising taxes on businesses and the wealthy even more.

Or, it will all become so painful to administer and cause so many economic distortions and dislocations that they’ll use it as an argument to move to a single-payer system. And this time, they might just get there because single payer makes a lot more sense than the godawful mess that is Obamacare.

Killing the messenger attempt duly noted. And avoiding what the plan actually says also.

The cite does link to a Kaiser calculator and to the reports or the CBO.

http://healthreform.kff.org/SubsidyCalculator.aspx#incomeAgeTables

Like if that was not also noticed in the previous discussions, moving to a single payer plan cold turkey would had been a disaster, the first battle IMHO was won, the idea is indeed to take a look at how the rest of the developed world manages to give health care to all at a cheaper cost, the next battle coming is indeed a lesson that most of industry in the USA should had learned a long time ago, unfortunately the only thing they did learn was to give money to congress critters that think that the current irrational system is the beesnees.

I thought reforms in the US system meant 97% of the population was covered - okay, it’s not quite ‘universal’, but it’s good enough for government work.

Lets start with that basic principle; universality.

Though not everyone needs a car, the vast majority have them. There was a time, I think, when they wer not required to buy insurance, but now they are. What do we know about what the economic effect of this was on car owners? Did the number of people buying cars change as a result? Did the price of insurance or cars or some other related product change? Etc.

Was there a differential between immediate economic effects and long term ones?

Notice that this prediction would be true even if the effect is negligible. News sources love stories like this.

Get enough of corporate America screaming for a viable health care option and all objections to single payer are going to go away.
BTW I work for a small business with less than 10 employees so I’ll wind up on the exchange paying my own. I hope to hell I qualify for a tax break on it.

I’m a health analyst for the federal government, and yes, Obamacare is causing layoffs. In particular, it’s the part with all the taxes to pay for the program. It’s fairly simple to understand: Taxes are a cost center for businesses, and increasing costs causes businesses to lay off workers. It’s hardly the result of “right wing lunatics” acting out of revenge. It’s simply makes business sense to compensate for the increased taxes by cutting worker hours to below 30 and laying people off.

But this is only the beginning. The companies that are now laying off workers are the larger companies that can afford to employ CPAs and tax lawyers. These businesses have known what the impact to their bottom line would be when the bill was passed almost three years ago. Just wait until the vast number of smaller businesses that haven’t started laying off people start to see the Obamacare taxes eroding their profits. That’s when the stuff will hit the fan.

And it’s not just that. Despite what Obama said would happen, the cost of health care is still increasing, not decreasing. People won’t be able to afford to buy insurance, and they’ll be penalized 2.5% of their adjusted gross income for not having insurance. Just wait until businesses no longer can count on having customers with the extra $1500 in spare cash to spend. That’s more layoffs. None of this stuff happens in a vacuum.

And by the way, the country only has half the number of doctors available as is to treat those who are insured, and the health reform law did nothing to increase the number of physicians or allied health personnel needed to treat the estimated 12 million people who will swamp the system in the coming months. People will be forced to spend $3500 per family member on insurance that they won’t be able to use because they can’t get in to see a doctor.