Monday, January 09, 2012

Obamacare In the Real World

Andrew Puzder, CEO of CKE Restaurants in a Bloomberg op-ed called "Job Creation Is Price for New U.S. Health Law":
Our company, CKE Restaurants Inc., employs about 21,000 people (our franchisees employ 49,000 more) in Carl’s Jr. and Hardee’s restaurants. For months, we have been working with Mercer Health & Benefits LLC, our health-care consultant, to identify Obamacare’s potential financial impact on CKE. Mercer estimated that when the law is fully implemented our health-care costs will increase about $18 million a year. That would put our total health-care costs at $29.8 million, a 150 percent increase from the roughly $12 million we spent last year.

The money to cover our increased expenses will have to come from somewhere. We are a profitable company and, after paying our obligations, we reinvest our earnings in the business. Reinvesting in the business is how we grow, create jobs and opportunity. This is true for most U.S. businesses.

To offset higher health-care expenses, we will have to cut spending on new restaurant construction, one of our largest discretionary spending areas. But building new restaurants is how we create jobs. An $18 million increase in our costs would more than consume the $8.8 million we spent on new restaurant construction last year, leaving nothing for growth. We will also need to reduce our general capital spending, which also creates jobs and allows us to improve our infrastructure and maintain our business. In summary, our ability to create new jobs could vanish.

To reduce the financial impact of Obamacare, many businesses, including ours, will have to consider increasing the number of part-time employees (those who work less than 30 hours a week as defined under the health-care law) and reducing the number of full-time employees. So, some individuals seeking full-time work will need to find two jobs.

Automation will also become more appealing. For example, although we value the personal touch, electronic ordering kiosks will become more economically desirable. Nationwide, 63 percent of our employees are minorities and 62 percent are female. Unfortunately, these cuts will affect them the most.

The complexity of this legislation makes it hard to anticipate costs in the future. Our investments pay off -- when they are successful -- over the long term. Because we don’t know what our health-care expenses will be in two or three years, we are unable to determine with any certainty how much our investments will have to return for us to be profitable. All of that counsels in favor of holding off on new investments and saving our funds. We want to grow. But we are unable to do so knowing that large and undetermined liabilities will absorb funds we otherwise would invest for expansion.
(via Carpe Diem)


Warren said... Many Docs Are Struggling, and It's Their Fault; Obamacare Not Mentioned

Bob in LA said...

Oh no. It's much worse that I imagined. I tried to tell my liberal friends that you can't increase demand by 10-20% and expect prices to fall in a supply constrained market. But, that's what they thought! Now the people that could barely pay for their own care, those at the bottom of the income bracket (Fast Food workers) are being made to foot the bill for themselves, and the freeloaders.

It's got to be stopped. Socialism that is.

Bob in LA said...

I cross posted the original story to my Facebook page. Everyone reading this should also tweet, toot or whatever you do to get the word out.

Warren said...

Two quotes by Thomas Sowell:

It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it.

It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.

Read more:

KitWistar said...

I think I feel sick....

OBloodyHell said...

>>> I think I feel sick....

Don't worry, President Downgrade has a bus to throw you under that can fix that.