Andrew Puzder, CEO of CKE Resturants

Andrew Puzder writes Job Creation Is Price for New U.S. Health Law in Bloomberg, 12/26/11:

Excerpt:

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.

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.

Repeal Obamacare.

An excellent article on the health care dilemma

‘A Wasted Opportunity’
Wellpoint’s CEO on ObamaCare’s mistakes and how to pick up the political pieces.
by By JOSEPH RAGO in the Wall Street Journal

excerpts

Mrs. Braly says, when 85 cents out of every premium dollar or more “is paid out in the actual cost of care, doctors, hospitals, suppliers, drugs, devices.” Confiscating the 2009 profits of the entire insurance industry would pay for two days of U.S. health care.

“In Maine, where guaranteed issue went into effect in 1993, there were 11 carriers in the individual market, and now there are two: Us, and another company that would not be called in any circle an equivalent health insurance company.” In Kentucky, 45 insurers fled the state, with WellPoint the last one standing, until the state started in 1998 to repeal most of these regulations.

Depending on the plan, WellPoint’s monthly premium for a 20-year-old in Indianapolis, where the company is based, ranges from $53 to $202. But the same young adult looking for similar coverage in Albany would face costs anywhere between $832 and $1,047. Obviously health costs vary across the country, Mrs. Braly says, but these disparities are almost entirely due to New York’s regulatory mandates. In a state with 19 million people, 88 New Yorkers between the ages of 18 and 24—88!—have bought WellPoint’s best-selling individual insurance product because insurance laws make it perfectly rational not to acquire costly coverage until people need it.

As Mrs. Braly diagnoses the U.S. health-care system, its two main strengths are (a) choice and flexibility and (b) cutting-edge treatments and procedures. But while American medicine has been shaped by specialization, scientific advancements and major technological breakthroughs, it is paradoxically antiquated. The modern managerial and corporate practices for obtaining better productivity and quality that have revolutionized every other sector of the economy have largely passed over medicine.