Saturday, March 23, 2013


Another example of short sighted decisions that makes matters worse  I especailly like this quote from Nancy Pelosi, "we had to pass the law to find out what is in it!"

This week, the New York Times highlighted the impact of the upcoming implementation of the healthcare bill known as the "Affordable" Healthcare Act. The newspaper highlighted the story of Baked in the Sun, a California baker with 95 employees. 

As it turns out, implementing the healthcare law could end up costing the company more than 65% of its net profits.

Baked in the Sun earns about $8 million in annual revenue, but in a competitive market, with heavy taxes and regulations in California, margins are so tight for bakeries that they end up with a total net profit of about about $200,000, or 2.5%. Given that the company has more than 50 employees, its owners must offer health insurance to every employee, or pay a fine for failure to comply when the new law kicks in.

The bill? Pay $108,000 per year and $10,000 in overhead in order to comply. Or pay the fine for each worker, a total of $130,000. Either way, there goes more than half of the company's profits.

Of course, this is just the unintended consequence of how Washington does business. 

The reality is that Congress pushed through a monstrosity of a bill that was so full of economic consequences, and no one paid any attention. Only 25 percent of Congressmen has any background in economics, which means that, typically, intentions trump logic when it comes to public policy. 

But it's not just the businesses that are suffering. A new congressional study says Obamacare has, in fact, increased the average family premium by $3,000 - and that's before the most costly requirements of the law take effect next year. Premiums are set to skyrocket all around the country, with millions of new people being added to the rolls, and the risk of less healthy patients being spread across the pool. Add in the fact that younger, healthier patients will likely pay the fines instead of paying outrageous annual premiums, and the end result will be higher costs for anyone who complies with the government mandate.

Below is a list of the expected increases in premiums over the next few years by state:

As Nancy Pelosi one said, "We had to pass the law to find out what is in it." Turns out it led to higher taxes and higher premiums - and it is already expected to lead to a massive exodus of doctors from the American healthcare market, which will drastically impact the quality of and access to healthcare.

Of course, California is already out in front of this doctor shortage issue. They addressed the issue by redefining what a doctor actually is... 

We'll talk about that next week. But we're curious if there are any small business owners or company leaders that are currently wrestling with how you're going to implement the healthcare bill. Have your premiums gone up? What alternatives do you propose to our current healthcare system? Let us know.

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