Re: OT: Layoff Letter

The reality...

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. ...Jim Thompson

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| James E.Thompson, CTO                            |    mens     |
| Analog Innovations, Inc.                         |     et      |
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Reply to
Jim Thompson
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So his profit margin is 3%? That doesn't sound like a healthy business to begin with. That is more like a social employment facility. OTOH if he raises the price of his product by 1.5% he already covered the costs of the healthcare plane.

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Failure does not prove something is impossible, failure simply
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Reply to
Nico Coesel

=A0 =A0 ...Jim Thompson

=A0 =A0| =A0 =A0mens =A0 =A0 |

=A0 | =A0 =A0 et =A0 =A0 =A0|

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23 stores?! 421 employees? and he only makes $800k/yr !!! Is that 'pure' profit that NEVER has to be dipped into? ouch that's not much money for a LOT of head aches.
Reply to
Robert Macy

I understand that's typical for that sort of business (franchised "store")... probably sub-S, so that's his personal income. ...Jim Thompson

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| James E.Thompson, CTO                            |    mens     |
| Analog Innovations, Inc.                         |     et      |
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Reply to
Jim Thompson

The company profit is 3%.

How much does "Mr Barr" take home ?

Opps sorry, I'm not suppose to ask that kind of question.

hamilton

Reply to
hamilton

Maybe he can ask his parents for some help.

Reply to
hamilton

Envy may be tempting, but it's a remarkably bad basis for economic decisions. If you make it economically unattractive for business owners to provide health care, they won't. What percentage of your income do you give away?

Cheers

Phil Hobbs

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Dr Philip C D Hobbs
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Reply to
Phil Hobbs

In the big picture, if all employers had to provide health care, they would all raise their prices about the same amount, which bottom-line makes the public pay for health care. Sort of like a sales tax.

Some will lose business to offshore companies, and dump domestic jobs one way or another. Things that are inherently local (restaurants, services) don't have that problem.

Unfortunately, Obamacare did nothing to reduce the cost of health care; it probably increased it a bit. Too many special interests had to be bought off, and too many staffers snuck in provisions that nobody got to read before the bill was passed into law.

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John Larkin                  Highland Technology Inc
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Reply to
John Larkin

I had to snort when I read that one!

Rick

Reply to
rickman

Taxes 28% healthcare 15%

I have not made a claim on my health program in 3 years, but every year is goes up.

I only see the president of Bluecross pay check going up.

So I give my money to Bluecross with no return

hamilton

Reply to
hamilton

You mean like when we find out that a name brand, especially ones directly connected to a big name personality, is paying low wages in a third world country and treating their workers like crap (even if they are a good employer compared to the local economy)? Why should we pay an extra $5 for iPhones just so the workers don't eat lunch next to the board cleaning solvents?

The only difference is that here we are talking about people we see every day in our restaurants and stores, we just don't seem to care much about them.

Yes, and that is the real problem, the cost of health care. But universal coverage will result in the true cost of medical care being exposed in the "public" market that is part of the new plan. I think that once people see just how insanely expensive medical care has become they will start to deal with the real problem, the costs. But that will be 10 years down the road.

Rick

Reply to
rickman

You don't understand insurance. You aren't buying health care, you are buying *insurance*. This spreads the cost of health care among all the members of the insurance pool. If you need it, it is there. If you don't need it you are paying for those who did. But going in you did not know if you would need it or not. The only thing you knew was that

*someone* in the pool would need it and that might have been you.

So you got what you paid for, the promise of health care *if* you needed it.

Rick

Reply to
rickman

Well, it is insurance. It's like fire insurance, you pay for something you hope will never be delivered.

But Bluecross is in the business of charging for something that they fight to not deliver. I hated battling with them. Kaiser, for a fixed fee, contracts to do whatever is needed, no hassles. They have a strong incentive to keep their members healthy and to minimize overhead.

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John Larkin                  Highland Technology Inc
www.highlandtechnology.com   jlarkin at highlandtechnology dot com   
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Reply to
John Larkin

I asked about _giving_, i.e. you seem to expect other people to be generous at the 50% level. Are you?

Cheers

Phil Hobbs

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Dr Philip C D Hobbs
Principal Consultant
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Reply to
Phil Hobbs

This is an interesting interpretation.

I give my money voluntary to the insurance company to keep me from going broke if I get sick or break something.

I also give my money to the local,state,federal government. I do expect to have roads to drive on and emergency personal if I need those.

The insurance company will fight me to give the services they promised to give. At least the local government will give me services with out question. ( even if I don't pay the highest tax rate )

There seems to be a problem with what insurance companies are in the business of.

Yes, I know "to make a profit for its share holders"

But what about the promise of services I supposedly paid for ?

The insurance companies can _not_ pay after the fact ??

Give a lame excuses as to why they won't pay.

My only recourse is to sue, but that time I may be dead and they know they they won't have to pay.

There is something wrong with this picture.

The politician were suppose to help the people in their home districts.

But politicians today are only interested in lining their own pockets.

I wish I know how to fix it.

Reply to
hamilton

Vote for a better class of people.

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John Larkin                  Highland Technology Inc
www.highlandtechnology.com   jlarkin at highlandtechnology dot com   
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Reply to
John Larkin

Nice idea, the crop of politicians on both sides of the isle today are the same. :-(

Reply to
hamilton

First step, don't vote for tall, charismatic, lawyer, career politicians with long heads.

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John Larkin                  Highland Technology Inc
www.highlandtechnology.com   jlarkin at highlandtechnology dot com   
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Reply to
John Larkin

Anybody trustworthy would not accept the job.

-- Les Cargill

Reply to
Les Cargill

No, you paid them for a service, i.e. protecting you from a financial loss. Risk costs something.

I was asking about _giving_, i.e. voluntarily parting with some proportion of your income just because it's the right thing to do, to help someone else, with no return to you whatsoever. You and the soup guy seem to think that the business owner quoted by the OP has some obligation to give away half his income to help other people. It's a nice idea, but sauce for the goose is sauce for the gander.

Do you give away half your income without return, just because it's the right thing to do?

Cheers

Phil Hobbs

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Dr Philip C D Hobbs
Principal Consultant
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Reply to
Phil Hobbs

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