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Franchisors warn Obamacare will halve profits

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Franchisors warn Obamacare will halve profits

September 13, 2012 | 4:27 pm 
367Comments
Photo - (Photo by Kevork Djansezian/Getty Images)
(Photo by Kevork Djansezian/Getty Images)

The International Franchise Association held a convention in Washington this week where most of the Radio Shack, Dunkin Donuts, Curves and other franchisers were grumbling about new federal regulations, especially the impact of Obamacare.

Most, said Atlanta Taco Bell and Kentucky Fried Chicken franchiser David Barr, presumed that the reports about how hard Obamacare will hit them were overblown. "They had their head in the sand," he told Secrets.

That is until he pulled out his powerpoint showing how funding Obamacare will cut his--and likely their--profits in half overnight. With simple math the small business folks understood, he spelled out that their only choice is to slash employee hours so they aren't eligible for company-paid health care or stop offering insurance and pay the $2,000 per employee fine.

Barr has 23 stores with 421 employees, 109 of whom are full-time. Of those, he provides 30 with health insurance. Barr said he pays 81 percent of their Blue Cross Blue Shield policy, or $4,073 of $5,028 for individuals, more for families, for a total bill of $129,000 a year. Employees pay $995.

Under Obamacare, however, he will have to provide health insurance for all 109 full-time workers, a cost of $444,000, or two and half times more than his current costs. That $315,000 increase is equal to just over half his annual profit, after expenses, or 1.5 percent of sales. As a result, he said, "I'm not paying $444,000."

Providing no insurance would result in a federal fine of $158,000, $29,000 more than he now spends but the lowest cost possible under the Obamacare law. So he now views that as his cap and he'll either cut worker hours or replace them with machines to get his costs down or dump them on the public health exchange and pay the fine. "Every business has a way to eliminate jobs," he said, "but that's not good for them or me."

But that's not all. His experience tells him that most low-wage workers he would have to cover under Obamacare won't take it because their $995 share is too high, meaning those the program was set up for won't see any benefit. And those who do will because they have major health issues, likely resulting in higher premiums to him.

by on Sep. 14, 2012 at 12:58 AM
Replies (21-30):
momto3infl
by on Sep. 14, 2012 at 9:11 AM
I am pretty sure it will. But don't worry if GOP gets elected this plan will be wiped out and then who knows what will happen to healthcare which to me is way more scary.

Quoting gsprofval:

We can HOPE that's how it will work, but only time will tell.


Quoting momto3infl:


 I have read many places and from the bill that some of this  in extreme cases, ok and extra money to cover bills-well many people who have insurance have copays and coinsurance and many hosptials and dr's require that upfront before the procedure is done-I still dont see the issue-because the people would have to sign something before money is taken out esp if people use credit unions since those federal regulations are diffent than other banks.


Quoting gsprofval:


I think you misunderstood.  Under obamacare, the government will take control of your personal bank account in order to make payments to the government every time or IF you are allowed to have any healthcare. IF you need surgery and the PANELS ALLOW it, the extra money needed will be taken directly from your bank account without your permission--at least that is what I'm getting so far from trying to read through the bill.


Quoting momto3infl:


 There is already governement control of the banks with regulations, and many people that dont trust banks.  As for the healthcare, I have said for years this country needs to have universal healthcare, and I still feel that way.  I like what Obama said last weekend, GOP gave the name Obamacare to the bill and he like that.


Quoting gsprofval:


There basically won't be medicaid any more. "Panels" who know nothing about us will decided what care we cannot/can get and for how much.


I'm reading through the bill and it looks like there will be total government control of your bank account and that is NOT good.


 


 


 



Posted on CafeMom Mobile
imamomzilla
by on Sep. 14, 2012 at 9:12 AM
1 mom liked this

 The writing is on the wall.

 

rocketracer
by Gold Member on Sep. 14, 2012 at 9:14 AM
2 moms liked this

I have a new slogan for the DEM party...."If your business failed, it didn't fail on it's own....we were there to help."

broncfan
by Silver Member on Sep. 14, 2012 at 9:17 AM
1 mom liked this


Quoting romalove:

 

Quoting _Kissy_:

So the needs of the owner are met, which is great. Employers that work for him, a nice hefty business salary, plus personal income, that probably can afford him his own health insurance. The worker however, working at dunkin donut barely makes enough to put pay rent let alone bills, groceries, insurance and the unforeseeable. There has to be a safety net somewhere. Oh yea its called welfare and its a no no.

Quoting romalove:

 

Quoting _Kissy_:

Profits before people.

 This is posted in another group, and I answered as follows.  I am sharing it here for you because it's frustrating to have this discussion, which is really a battle between idealism and realism.  :

The example had the man losing half of his profit to Obamacare, and his profit looks to be about $650 to $700K, which is quite a bit of money but not millions. His expense rises from $129K to $444K per year.

I have no idea why anyone thinks that's OK. Is there a figure that someone is supposed to make? A franchisee has already put a big investment into their business, and continues to do so, as per their contracts. Why would we disincentivize earning money? When did that become bad?

If you notice, this particular example has the franchiser paying 81 percent of insurance costs for this full time employees he's got on the plan. That's actually quite generous. He is now punished for his generosity. Additionally, many of the people who he will now have to cover (or pay a fine for not covering) wouldn't take coverage because they don't want to pay the $995 (or can't pay it) that they would be responsible for.

So, the sum of this is, little or no additional people being covered, a businessperson being punished for being generous with their employees, and money transferred once again from citizens to government.

Gotta love Obamacare.

 


 The owner is trying to meet his own needs.  He has invested and worked at making a business.  I'm not sure why that's a bad thing.

You didn't address what I said, though, in terms of disincentivizing profit making, or that it insn't in the end helping the employees.  If you noticed, the employees likely wouldn't be taking the insurance if he offered it to them, and he'd have to pay the $2000 fine regardless.  Is your answer that the employer should have to increase the salary of the employee enough that they can then afford the $995 they must pay towards the insurance?  Then the employer, in addition to a $315,000 hit, would have an additional hit of $1K per employee on top of that.

None of this makes sense, not for the employer and not for the employees. 

Unless you want to pay $10 for coffee and a donut.

Unless you want to pay $10 for coffee and a donut.

Perfect answer, this is what people do not "get", they are either stupid or have their head so far up .....somewhere....they can not see.

erika9009
by Silver Member on Sep. 14, 2012 at 11:14 AM
2 moms liked this

Or if it puts them in the red, then 1/2 get laid off.

Most companies biggest cost is labor.   When they need to reduce costs, what do they do?  Lay off people.  It's a grim reality

Quoting _Kissy_:

Profits before people.


____________________________________________________

Erika..

Children are a blessing and are never inconvenient.............

erika9009
by Silver Member on Sep. 14, 2012 at 11:32 AM

How about I edit this for you

"Profits FOR people"

My old comany had profit sharing and we got a check every qtr.  This really did motivate people to look at waste and cost.

More than once you'd see notes posted above the copy machine saying, "Don't waste paper.   It cuts into YOUR profit sharing at the end of the qtr."

Now, I wonder how many would be for ObamaCare if they knew their $400 quarterly profit check would be cut to $200?  I think some would be ok with it, but the majority would not.

Quoting _Kissy_:

Profits before people.


____________________________________________________

Erika..

Children are a blessing and are never inconvenient.............

mustbeGRACE
by Silver Member on Sep. 14, 2012 at 11:47 AM

Need a job?

Elect Obama and eat dirt.

gsprofval
by Gold Member on Sep. 14, 2012 at 11:49 AM

That's all we will be able to afford to eat, but he will put that under government ration, too.

Quoting mustbeGRACE:

Need a job?

Elect Obama and eat dirt.


rocketracer
by Gold Member on Sep. 14, 2012 at 11:51 AM
1 mom liked this

The EPA will just flag more areas Green Spaces or Wet Lands and if you dare try to procure your own dirt from either of those type of areas, you will be arrested.  big smile mini

Quoting gsprofval:

That's all we will be able to afford to eat, but he will put that under government ration, too.

Quoting mustbeGRACE:

Need a job?

Elect Obama and eat dirt.

 


Carpy
by Platinum Member on Sep. 14, 2012 at 7:23 PM

They don't need profits.  Profits are evil.

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