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.
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.
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.
HKO Comments:
Mr. Puzder speaks eloquently how jobs are created and how government policies stifles that creation. I hear this dilemma frequently, but few have stated it so clearly.
This administration has clearly demonstrated that it has no clue how the private sector works or how government policies impact private hiring. Government has never created a single job: each job it has “created” came at the expense of at least one job in the private sector, often more than one. They are capable, however, of killing job creation with its mandates and regulations.
I strongly recommend that you read the whole article. Tips to Carpe Diem for posting it as well.
The health care bill continues to kill jobs. Our rates have climbed while our coverage is reduced, but the real cost is still ahead. Pending rules creates huge burdens on business, especially small business where job growth during a recovery is usually concentrated. As more and more businesses close, sell or downsize, few new businesses are forming to fill the gap. This bill is one of the reasons.
In 2014 the law requires a single rate. No longer will insurance companies be able to charge a different rate based on age or sex. Anytime a range of prices is reduced to a single rate, some buyers will gain and some will lose.
You do not have to be a statistical genius to see who the losers are. The youngest workers will see a significant increase in health insurance premiums. Those with the lowest wages and highest living expenses (families) will be forced to shoulder the highest cost.
Such a single rate may seem “fair” to those who have no idea of how markets work.
If you buy a whole life insurance policy when you are young you pay a lower rate. Cash balances build, keeping your premium low. It encourages a long term relationship with your insurance carrier.
The Health Savings accounts is somewhat like whole life in the sense that you can build cash values for future use. Getting more young people on such plans is part of a longer term solution to rising health care costs and covering more people.
There are some ground rules that need changing, but the better long term solutions will create an environment where health insurance is an individually owned product, like life insurance and auto insurance. Regulations and mandates only drive up costs; they should be reduced. And market forces like health savings accounts and allowing insurance companies to cross state lines should be encouraged.
The Obama Health Care bill should be repealed- totally.
When asked what constitutional authority gave the government the right to mandate citizens to buy health insurance, Nancy Pelosi contemptuously replied ” Are you serious?”
Yes Nancy we are and so are judges who take the constitution more seriously than you.
The administration used the Commerce Clause to justify its control grab, but that has failed. Then they used the Necessary and Proper Clause, but that was rejected as well. In the Wall Street Journal Online law professors Randy Barnett and Elizabeth Foley explains Judge Vinson’s Ruling in The Nuts and Bolts of the ObamaCare Ruling.
Excerpts:
Recognizing the vulnerability of relying on the Commerce Clause alone, the Obama administration in the Florida case shifted its emphasis to the Necessary and Proper Clause of the Constitution. That clause empowers Congress to enact “all Laws which shall be necessary and proper for carrying into Execution” its enumerated powers. As the Supreme Court has repeatedly explained, the Necessary and Proper Clause does not expand the scope of Congress’s enumerated powers. Instead, it gives Congress the ability to select among various means of exercising them—for example, the enumerated power to “establish post offices” necessarily and properly includes a power to print stamps.
This novel use of the Necessary and Proper Clause, if allowed to stand, would fundamentally transform our constitutional scheme from limited to unlimited federal power, narrowing the scope of individual liberty. In Judge Vinson’s words, “the more harm the statute does, the more power Congress could assume for itself under the Necessary and Proper Clause. This result would, of course, expand the Necessary and Proper Clause far beyond its original meaning, and allow Congress to exceed the powers specifically enumerated in Article I.”
HKO comments:
Besides being ridiculously complicated, poorly understood, the most partisan major legislation ever passed, and lubricated with bribes and lies, this bill has trouble passing even basic constitutional muster. For some the Constitution is just an impediment to central control and power that must be overcome; for others the Constitution is an impediment to central control and power that must be respected.
The more we depend on the government to make market decisions, the more we replace individual choice with political power. This requires more reliance on lobbyists to protect individual and special interests.
A market based economy is more tolerant of individual choices, whether it be choice of religions, music, domiciles, sexual orientation, cars, reading material, art form, food, or health care provider.
The phrase “fatal conceit” coined by F.A. Hayek refers to the belief by the governing that they can solve all of our problems. Hayek noted in The Road to Serfdom that the very people who believe they can deliver better social justice using the force of government are the most abhorred by the tactics that must be deployed to enforce the outcome they desire.
Central planners are ultimately undone because they believe the ends justify the means. American voters do not agree, (except in times of war).
An neither does Federal Judge Roger Vinson in Florida.
One of my least favorite acts as a business executive is buying health insurance for my employees. Being a small business I am pretty close to the individual needs and preferences of the workers, and there is just no way I can buy for so many individuals and accommodate their individual needs and desires. Health insurance should be individually owned like their other insurance products.
But the real problem is price and it is getting much more expensive. Under the new health insurance requirements, preventive physicals are covered at 100%. This includes heart screenings, colonoscopies, pap smears, and other screenings. This is even required on the high deductable plans where we were previously willing to pay more for out of pocket treatment including physicals. Now thanks to Obamacare we do not have that choice. It should be no surprise that the result is higher health insurance premiums.
The belief is that by covering preventative screening that it will save health insurance costs later. This seems logical but it is probably a myth. In the short term the costs must go up by the higher costs of reimbursements for physicals plus the likely probability that more people will thus get more physicals more often. There is also the possibility that this will cause more unnecessary treatment further adding to the cost. I would not readily assume that this higher upfront cost is balanced by any real savings in catching diseases early. While it may potentially save a life it does not follow that by doing so it decreases overall health insurance costs.
Why not require coverage of gym memberships, running shoes, healthy food, meditation classes and other health promoting activities?
The belief is simply that the public is too stupid to take proper care of themselves and will skip physicals to save money. These are the same people who need no incentive to change the oil in their car. The real fact is that many of those who skip physicals are the young who are at very low risk and maybe got a physical every two are three years, who now will have incentives to get one every year, increasing health insurance costs for everyone.
But the greater issue is that citizens prefer choice to government mandate. They may spend more for health care because they value it and they may be more than willing to spend their own money for physicals to hold health issuance premiums down. Just witness the growth in alternative therapies that were not covered under existing health plan. Requiring coverage that individuals may opt out of just increases insurance costs (and insurance company profits) and causes many to just drop coverage countering any benefits, illusory as they may be, that the bureaucrats expected.
My fellow workers are not stupid. The vast majority of them manage their affairs and family responsibilities quite well. They do not need Washington to treat them like idiots and increase their health care costs.
