Research Briefing

Obama’s Government-Run Health Care Bill “Begging Firms Not To Create Jobs”

JOB CREATORS ACROSS THE NATION CONTINUE TO FEEL FALLOUT OF OBAMA’S BILL

California Management Professor: New Health Law Is “Begging Firms Not To Create Jobs.” “Firms are scrambling to find out the implications for their firms so they can begin to make intelligent decisions to prepare for those changes starting next year, she said. Jack Kyser, founding economist of the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp., said his organization’s regional managers report that some small businesses in the Los Angeles region are seeing a small uptick in orders, but are holding off on hiring or expansion as they watch how health care reform unfolds. Prag said that coming out with health care reform at a time when businesses are trying to gauge the economy is ‘begging firms not to create jobs.’”  (Jim Steinberg, “Rate Hikes Likely With Health Care Reform,” The Redlands Daily Facts, 4/5/10)

• California Employer’s Association Says Government-Run Health Care Creates Uncertainty And “Business Doesn’t Like Uncertainty.” “There’s another unintended consequence of health care reform smoldering in the business community: uncertainty. Just as some Southern California companies are beginning to feel their way out of the recession, the sweeping health care proposal has introduced another unknown factor into their decision-making equations. ‘Business doesn’t like uncertainty,’ said Kim Parker, executive vice president of the California Employer’s Association.” (Jim Steinberg, “Rate Hikes Likely With Health Care Reform,” The Redlands Daily Facts, 4/5/10)
• California Restaurant Chain Will Cut Staff Because It Can’t Afford To Provide Government-Approved Insurance. “Albert Okura, founder and owner of the San Bernardino-based Juan Pollo chain of 32 restaurants, said he doesn’t provide health care insurance to employees now, because most are in their teens. If required to do so, it will likely mean operating with fewer employees, he said. ‘Sales are down from 10 years ago, and costs are up. And employees are our biggest expense.’” (Jim Steinberg, “Rate Hikes Likely With Health Care Reform,” The Redlands Daily Facts, 4/5/10)

Carpenter Technology Corp. Said It Will Have $5.9 Million Charge As A Result Of Health Care Bill. “Carpenter Technology Corp., Wyomissing, said it would record a noncash charge of about $5.9 million, or 13 cents per share, in its fiscal third quarter as a result of the federal health-care reform legislation enacted last month. Under the measure, the income tax treatment of the subsidy to encourage companies to provide retiree prescription drug coverage has been changed.” (Paul Schweizer, “Business News In Brief: Carpenter Takes Health-Care Charge,” The Philadelphia Inquirer, 4/2/10)

Texas Medical Device Companies Say Obama’s Tax “Would Impose An Unfair Burden” That’ll “Forc[e] Companies To Either Cut Costs Or Raise Prices” And Push Some “Into The Red.” “Because the tax would be based on sales, rather than profits, medical devices companies say it would impose an unfair burden. Taxes could double or triple at some of the nation’s medical device companies. Some profitable businesses might be pushed into the red. Taxes would apply to a wide range of products, from cotton swabs and medical tape to replacement hips and eyeglasses, forcing companies to either cut costs or raise prices to maintain profits.” (Christine Hall, “Perspectives On Reform: Medical Device-Makers Among Those Impacted By New Bill,” Houston Business Journal, 4/2/10)

Massachusetts Medical Device Companies Said Tax “Could Stifle Innovation, Drive Jobs Overseas, And Force Them To Raise Prices.” “On the same day, Patrick hosted more than a dozen representatives from the Massachusetts medical device industry at the State House. They told him the tax could stifle innovation, drive jobs overseas, and force them to raise prices. Richard A. Packer, chief executive of defibrillator maker Zoll Medical Corp., based in Chelmsford, has met with Brown and Patrick to discuss the issue. ‘I think the medical device bill is ill-conceived, and is not a good part of the legislation,’ he said. ‘I’m in favor of repealing it in total, or going in and seeing how it can be adjusted.’” (D.C. Denison, “Repeal Of Medical Devices Tax Unlikely,” The Boston Globe, 4/3/10)

• Spokesman For Massachusetts-Based Covidien PLC Said “The Medical Device Tax Is Inappropriate.” “At Covidien PLC, which has its US headquarters in Mansfield, spokesman Eric Kraus said the company is ‘committed to health care reform, but we feel the medical device tax is inappropriate.’” (D.C. Denison, “Repeal Of Medical Devices Tax Unlikely,” The Boston Globe, 4/3/10)

Virginia Small Business Owner Says Health Care Bill “Detrimental To The Incentive To Grow And Provide Jobs For People.” “Karch, for example, said 95 percent of the staff at Home Instead Senior Care work part time, but he technically has more than 50 full-time equivalent employees. He said he doesn’t know if that means he has to provide health insurance for all his employees or just those who work full time. If part-timers are included, he said he’d either have to shut down or raise his rates. ‘As a small business owner, I definitely feel this legislation is detrimental to the incentive to grow and provide jobs for people, especially people that, for a variety of reasons, can only work part time,’ Karch said.” (Cathy Jett, “Reform Getting Mixed Reviews,” The Free Lance Star, 4/3/10)

Minnesota Tanning Salon Owner Said “Our Business Will Go Down.” “Tanning salon owners, meanwhile are feeling burned. ‘Our business will go down,’ said Don Nelson, who owns nine Totally Tan salons in the northern metro. ‘Some people just don’t want to pay extra.’” (Jackie Crosby, “Salons Seeing Red Over Federal Tanning Tax,” Minneapolis Star Tribune, 4/2/10)

• International Smart Tan Network Said Tanning “Tax Is A Microcosm Of What Went Wrong” With Obama’s Government-Run Health Care Bill And Could “Shutter Up To 1,000 Businesses And Put About 9,000 Jobs At Risk.” “‘The tax is a microcosm of what went wrong with the entire process of this health care bill,’ said Joseph Levy of the 3,000-member International Smart Tan Network. … With salons already hobbled by the recession, Levy believes the tax could shutter up to 1,000 businesses and put about 9,000 jobs at risk.” (Jackie Crosby, “Salons Seeing Red Over Federal Tanning Tax,” Minneapolis Star Tribune, 4/2/10)

FAMILIES AND LOCAL GOVERNMENTS ARE STARTING TO FACE HIGHER HEALTH CARE COSTS

Double-Digit Increases For Employer-Provided Insurance Premiums Can Be Expected In California. “But the powerful force of health care reform… will also add fresh fuel to the already raging wildfire of health care costs. You’ll feel the strength of those flames when you see the costs for next year’s health care coverage. ‘I’d be very surprised if we were not looking at a double-digit increase’ for company-provided health care insurance next year, said Jay Prag, an economics professor in the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University. And those increases are likely to be passed down to employees, Prag said.” (Jim Steinberg, “Rate Hikes Likely With Health Care Reform,” The Redlands Daily Facts, 4/5/10)

• “Ronald Wanglin, Board Chairman Of Bolton And Co., A Pasadena-Based Employee Benefits And Insurance Brokerage Firm, Says That In The Last 12 Months, Company Health Insurance Plans Have Increased Anywhere Between 8 Percent And 25 Percent, Depending On The Plan. Health Care Reform Will Push Those Costs Even Higher Next Year, He Said.” (Jim Steinberg, “Rate Hikes Likely With Health Care Reform,” The Redlands Daily Facts, 4/5/10)

Massachusetts Municipalities “Will Feel The Squeeze” From Obama’s Tax On Benefits And Taxpayers “Could Be Facing Thousands Of Dollars In Additional Costs.” “Massachusetts municipalities that offer employees, retirees, and elected officials the most generous and costly health insurance plans will feel the squeeze of the new national health care law’s tax on ‘Cadillac’ insurance plans. … A few cities and towns already have family plans that exceed $27,500, and many others are on track to surpass that level before the tax kicks in. That means taxpayers in many communities could be facing thousands of dollars in additional costs for every employee, retired worker, and elected leader they cover, unless those communities move soon to scale back coverage, a change the law is designed to encourage.” (Sean P. Murphy, “Health Tax May Wallop Towns,” The Boston Globe, 4/5/10)

• Municipal Association Executive Director Geoffrey C. Beckwith: “This Could Be Extremely Expensive… In General, Municipalities Would Fall Into This Tax Because Health Care Is Very Expensive In Massachusetts And The Municipal Plans Are Very Generous.” (Sean P. Murphy, “Health Tax May Wallop Towns,” The Boston Globe, 4/5/10)
• Framingham Board Of Selectmen Chairwoman Ginger Esty: “The Cost Of Health Care Already Is Extremely Expensive… And If We Don’t Get Any Relief From The Unions, There’s Only One Thing We Can Do, And That Is Lay Off Workers.” (Sean P. Murphy, “Health Tax May Wallop Towns,” The Boston Globe, 4/5/10)
•  “The State Division Of Health Care Finance And Policy Estimates That 8,600 State Residents Would Be Subject To The Tax, Based On A Recent Survey Of Employers.” (Sean P. Murphy, “Health Tax May Wallop Towns,” The Boston Globe, 4/5/10) 

WHILE DOCTORS, HOSPITALS FACE CRISIS IN PROVIDING CARE

“Nothing Congress Has Done To Reform The Nation’s Health Care System Will Address A Serious National Shortage Of Primary Care Doctors, A Problem Expected To Worsen As The Reforms Take Effect. The shortage of 16,643 general practitioners affects areas with a combined population of about 65 million people, according to federal health officials. The problem is especially acute in rural states such as South Dakota, where attracting doctors always has been a challenge… Health care reform will expand the number of insured Americans by 32 million, which college officials and lawmakers warn will exacerbate the problem.” (Bart Jansen, “Health Care Reforms May Worsen Doctor Shortage,” The Argus Leader, 4/4/10)

Nebraska’s Gothenburg Memorial Hospital Administrator Believes Reform Could Drive Rural Hospitals Out Of Business. “In addition, Johnson said the legislation cripples rural hospitals from advancing important technology such as offering new types of testing and buying surgery equipment—both which translate into better patient care. ‘It could drive rural hospitals out of business,’ Johnson said. The bottom line, he said, is higher costs for patients. Johnson said rural hospitals that are suffering financially will likely have to approach their local community for more tax-based assistance. Other things could be done to simplify health care costs and coverage but ‘overregulation blows in the face of opportunities to reduce costs.” (Elizabeth Barrett, “Johnson: Bill Not Good For Hospitals,” Gothenburg Times, 4/2/10)

Alabama Already Faces Doctor Shortage, Which Dems’ Government-Run Health Care Experiment Is “Complicating.” “Alabama is woefully short of physicians, even before hundreds of thousands of uninsured residents gain access to insurance coverage in 2014 under the recently passed health care law… Complicating the matter is the large number of uninsured Alabamians who would qualify for Medicaid under the new health law, an estimated 400,000. Many physicians in the state don’t accept Medicaid coverage, or limit the number of Medicaid patients they see, because of low reimbursement. ‘I think we have a critical access emergency for primary care providers,’ said Dr. Elizabeth Ennis, chief medical officer of Baptist Health System.” (Anna Velasco, “Doctor Shortage Greets New Health Care Law,” The Birmingham News, 4/4/10)