"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

Restaurant Chains Threaten Layoffs Because of Obamacare

July 7th, 2010 by sclemons · No Comments

 

It’s been a few days since the last story detailing the negative consequences of President Obama’s massive, unpopular health care law, which was the costly tanning tax hitting small business owners across the country going into effect last week. But sure enough, there was another one yesterday.  The Cleveland Plain Dealer has a must-read article explaining how restaurants across the country, and especially Ohio-based White Castle are going to have much higher expenses face fines, and may even be forced to lay off workers thanks to the health care bill.

The Plain Dealer reports, “The White Castle hamburger chain fears that a health insurance reform law adopted earlier this year will put its profits on a downward slide. The Columbus-based family owned restaurant chain . . . says a single provision in the bill will eat up roughly 55 percent of its yearly net income after 2014. Starting that year, the bill levies a $3,000-per-employee penalty on companies whose workers pay more than 9.5 percent of household income in premiums for company-provided insurance. White Castle, which currently provides insurance to all of its full-time workers and picks up 70 to 89 percent of their premium costs, believes it will likely end up paying those penalties. The financial hit will make it hard for the company to maintain its 421 restaurants, let alone create new jobs, says company spokesman Jamie Richardson. White Castle employs more than 10,000 people nationwide, and more than 1,200 in Ohio.”

But it’s not just Ohio restaurants that are going to be hit with all these new costs. National Council of Restaurants “vice president Scott Vinson says the entire restaurant industry will have trouble dealing with costs the bill imposes in 2014, including a $2,000-per-worker penalty that companies with more than 50 employees must pay if their workers end up purchasing federally subsidized insurance rather than getting insurance from their employers. ‘There is the expense of actually providing the insurance, then the expense of not providing insurance,’ says Vinson. ‘It will be expensive either way.’”

The Plain Dealer also spoke with George Ebinger of New Jersey, who owns a number of IHOP restaurants. “He figures he will have to raise prices and possibly lay off workers to come up with the $220,000 he anticipates the penalties will cost. ‘We are still figuring out how to deal with this,’ says Ebinger. ‘Ultimately, either businesses will close or consumers will pay more.’”

Reacting to the White Castle news, House Republican Leader John Boehner, who also hails from Ohio said, “The irony is that in the name of expanding health care coverage, the administration is making it harder than ever for unskilled workers to get started in the workforce.”

The Plain Dealer also notes, “White Castle, which began offering health insurance to workers in 1924, is also examining whether it would make financial sense for the company to eliminate health insurance coverage altogether and have all its employees buy insurance on the federal exchange, says Richardson.” And White Castle isn’t the first employer to contemplate doing so.

Wasn’t health care reform supposed to save money on health care? Didn’t Democrats repeatedly promise that if you like your health care plan, you can keep it?

Every week Americans are seeing more and more the negative impacts of Democrats’ health care law, which a majority opposed to begin and continue to view unfavorably. It should be repealed and replaced before any more damage is done to the economy and out health care system.

Related:

Rasmussen Reports: 60% Favor Repeal of Health Care Law, Just 41% See Repeal as Likely

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