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Too bad these these idiots that proposed and passed this understood basic economics. It's like when the City of Detroit - led by Extreme Left hero Coleman A Young, jacked taxes on businesses in the City of Detroit thinking he "got them good "- They just left the city along with their employees. Obamacare: So frickin dumb.
Six in 10 physicians said it is likely many of their colleagues will retire earlier than planned in the next 1 to 3 years.
I'm not a doctor, but I went to a doctors' recruitment dinner yesterday. They all seemed really excited about the increase of the number of newly insured. Thoughts?
They are not economists, either.....
Obamacare gives some small businesses a choice, in the case below:
Company Profit: $200,000
Choices for this 95 person company?
1) Pay Obamacare Cost: $108,000 leaving Net $92K
2) Pay Obamacare Penalty: $130,000, leaving net $70K
3) Sending 45 employees to the unemployment line to get under the 50 employee ceiling.
Stupid law, passed by stupid people, voted in by really stupid people that are going to get hosed they don't realize it.
Questions Abound in Learning to Adjust to Health Care Overhaul
Sandy Huffaker for The New York Times
Rachel Shein, who operates Baked in the Sun, with bakery workers. She is weighing the options on employee health insurance.
By JULIE WEED
Published: March 20, 2013
Baked in the Sun is a wholesale baker and distributor of freshly baked pastries near San Diego.
You're the Boss
Should a Bakery With More Than 50 Employees Offer Health Insurance?
Baked in the Sun has three options under the new law: offer insurance, pay the penalty or reduce head count.
THE CHALLENGE The company is one of thousands of small businesses that employ more than 50 full-time employees and thus will be required to offer health insurance to their workers — or pay into a government fund — beginning Jan. 1. Rachel Shein and Steve Pilarski, the married owners of the bakery, which employs 95 people, estimate this could cost their business up to $108,000, and they are weighing their options as the date approaches. “Our revenues are about $8 million, but the food business is a low-margin industry so cutting $108,000 out of our profits, which are just over $200,000, is a big deal,” said Ms. Shein, who is the chief executive. They are evaluating different ways to comply with the new law and finance the expense.
THE BACKGROUND Ms. Shein and Mr. Pilarski bought their first bakery, a maker of scones, 16 years ago. Their business grew along with the popularity of coffee shops, and they expanded their product line to include other pastries.
During the recession, the coffee shop business contracted, so they found new customers among hotels and hospitals, but the cost of servicing different types of businesses and developing new products to meet their needs eroded profits. At the same time, gasoline and ingredient prices went up and vendors tightened payment terms. Still, the couple persevered by providing an array of freshly baked goods and offering product variety and consolidated delivery, simplifying things for their customers.
With the recession behind them, Ms. Shein and Mr. Pilarski are trying to rebuild their profitability. Baked in the Sun produces nearly 200,000 items a day — almost 200 different products, including brownies, coffee cakes, muffins and cookies — in an 18,500-square-foot baking facility in San Marcos, Calif. The goods are delivered to coffee shops, schools, hotels and hospitals in the San Diego area.
THE OPTIONS Ms. Shein is contemplating several options to comply with the Affordable Care Act’s business mandate.
Option One is to provide the insurance. According to the law, Ms. Shein will have to offer health insurance or, most likely, pay a penalty, and she estimates the insurance will cost up to $108,000 a year for 90 employees (managers have insurance already).
This is just an estimate, she said, because the insurance companies have not yet created and set a price on plans that meet the law’s requirement for minimum care. She estimates a cost of $200 per employee a month, of which the bakery would pay half and the employee would pay half. Employees can choose not to participate in the plan if they are covered elsewhere or for other reasons, so it is unlikely they will all sign up.
Option Two is to not offer health insurance and let employees find coverage elsewhere, perhaps on one of the new government exchanges. Under this option, the company will probably have to pay the mandated “employer shared responsibility payment” to the government.
The cost to the business would be $2,000 per employee a year, but the law exempts the first 30 employees, so the total would be $130,000 per year for a 95-person company. One benefit of this option is that the company would not have to take on the burden or expense of managing the insurance plan, which Ms. Shein estimates would take $10,000 of staff time.
One way to cover the costs associated with the new law would be to raise the price of each item sold about 4 percent and pass the costs along to buyers. “It’s ironic that our success meant we could grow,” Ms. Shein said, “and now we will be competing against smaller companies, with 50 employees or fewer, who will be able to charge less per item because they don’t have the financial burden of health insurance.” Prices are currently similar among local competitors, Ms. Shein said, and she says she believes the increase in her prices could affect her sales, possibly significantly.
Ms. Shein is considering a third option: outsourcing certain jobs to reduce the staff, because businesses with 50 or fewer employees will be exempt from the penalty. “We can outsource the cleaning and make the drivers independent contractors,” she said, “and we can cut the least profitable delivery routes, least profitable accounts or reduce the variety of items we create.”
It is important for Ms. Shein to make a decision soon on staff levels because the number of full-time employees a business has in 2013 will determine its status in 2014. If the business has 50 or more full-time, or full-time equivalent, employees, it has to provide insurance to any staff members who work 30 hours or more a week. Companies can average their number of employees across the full 12 months in 2013 to see whether they meet the threshold, or they can instead calculate the number of full-time employees by using any six-consecutive-month period in 2013.
Should a Bakery With More Than 50 Employees Offer Health Insurance?
Ms. Shein said she believed all workers should have health insurance, and she and her husband had wrestled with the problem for years. “We have offered health insurance to our employees in the past,” she said, “for preventive care, for financial protection, and because it doesn’t make sense for taxpayers when they end up in the emergency room.”
However, she has found many of her employees resistant to coverage that requires an employee contribution. “They are mostly young and healthy,” she said. “They don’t have a lot of extra money, and they would rather have a bit more in their paycheck than health insurance.” Also, she said, some of her Mexican employees prefer to go south of the border for inexpensive health care when they need it.
WHAT OTHERS SAY John G. Ebenger, an accountant with Berkowitz Pollack Brant Advisors and Accountants in Miami: “It is a challenging situation, especially since the details have not been fully worked out. The bakery could opt to bite the bullet and pay the penalty next year with plans to revisit the types of insurance that become available in 2014. With a year to plan, insurance companies will come up with more options for employers.”
Jonathan Gruber, an economics professor at M.I.T. who advised the Obama administration on health care reform: “Rachel and Steve face a difficult decision, but it seems that the third option, to reorganize production and outsource functions to end up with fewer than 50 workers, will be too expensive to make much sense. Offering insurance won’t cost much more than the penalty, and in an industry where many of their competitors don’t offer insurance, they could advertise themselves as a better place to work.”
Jody Hall, owner of Cupcake Royale, with 80 employees in Seattle, and a leader of the Main Street Alliance, a national network of small-business groups: “I’d recommend offering health care insurance for full-time employees, like we do at Cupcake Royale, as part of our responsibility to help strengthen the health of our employees, our community, and our business.
“Ms. Shein is probably overestimating her costs because not all employees will use the health insurance she offers. At our bakery only about half our employees use the health insurance we provide. Some are under 26 and covered by parents, others have spouses with coverage, and some just choose not to take it. Small businesses like mine who have been offering health care will be better off when all businesses are paying into the system because the cost increases will slow down.”
THE RESULTS Offer your thoughts on the You’re the Boss blog at nytimes.com/boss. Next week, on the blog and on this page, we will give an update on what Ms. Shein is planning to do.
The owners of a wholesale bakery near San Diego must decide whether to offer insurance to their employees or pay into a government fund.
You really believe that line of BS?
If that's the case it's a good thing Western Michigan, Central Michigan are opening medical schools and Oakland has already admitted its first classes. All those new grads will be joining MSU, Wayne State and um medical schools filing in the spots all those doctors will allegedly be leaving.
Damn, you are one gullible SOB.
Figure that will be about 500 new doctors per year graduating in MI alone. Then there are all those doctors trained in foreign lands like India, England, the Phillipines (that already has nurses coming to the US in large numbers) who will be happy to work in the US.
Maybe you better leave and go to a place that's a better fit for your low tax / reliable government services ideals.
You think a 95 person company turing 200K in profit is paying health insurance today?
I know much, much more about the ACA than you do. Not all of it is great, but you should at least make an attempt to to try and look smart. This is a GRR level argument.
Change we can believe in
Medicine isn't what it used to be. In certain specialties it can still be lucrative, but all of them they work like crazy. Wifey averages 60 hrs a week minimum and she is in one of the better lifestyle specialties. Plastics and dermatology are the way to go. Cash only for the most part and no emergencies. F medicare/medicaid, insurance companies and Barrycare.
Still living off your wife?
A small business that makes 200k a year is rich. They deserve to be brought down to an income of 70-90k. That is only fair to make them pay. Who cares if they risk everything to fund the business or that they work 90 hours a week . They deserve the same income as their employees.
Signed, WH Libs
"If you have the right to be offended I have the right to offend you." - Ricky Gervais
This is only happening because we didn't do single payer
What is really humorous is that no one has said a word about the administration at hospitals. What a joke to have a guy with a MBA sitting in HR or accounting making more then a DR. That is messed up, you want to get to the root of the problem that is a good size of it.
Once again, GRR proves he doesn't know what he is talking about.
The number of doctors entering practice has nothing to do with medical school spots. It has to do with residency positions. To increase our number of practicing doctors the number of residency spots must go up. Right now we have more residency spots than med school grads, they are filled by foreign grads. Increasing med school numbers in the US simply decreases the number of foreign grads in the US.
Does that thinking work for the public schools or government agencies or only for Hospitals?
6 years ago most people had no deductibles and $0-$15 copays. Today everyone has at least a $500 deductible and a $25-$50 copays. These increases mean little to the 1%, but to the middle class these increases really hit home. Insurance companies have created a billing system that essentially forces cash patients out of the system. For instance, technically a doctor can't charge a different amount to a patient paying cash at the time of service as one that is paying with insurance. Keep in mind that the patient paying cash doesn't need to have their insurance billed, the claim denied, someone to call the insurance company to find out why the claim was denied, resubmit the claim, wait for reimbursement, get the check, apply it to the account minus the approved amount and "in-network" discounts, and then bill the patient for the $2.32 of the remaining balance. Obamacare isn't suppose to work, it was designed to fail so we can get to single payer. A single payer system in the US will result in an enormous divide of rich vs poor. The rich will pay cash for the best doctors and healthcare, and the poor with the government insurance will be stuck waiting in long lines.
So how many operations with 2-3000 employees pay minimum wage to their top execs? would you feel comfortable at a hospital where the CEO was comfortable making $90k, when the market rate for an $800k-$1 bil in sales enterprise is paying $1mil+.
Personally I prefer not to have the DMV business model applied to my healthcare provider.
"This board would be great if it weren't for all the posters. ." -- AA Spartan 12/16/11
Regional health center - top administrator earns about 700k with other top corporate officers earn 200-400K while average Drs. earn 100-150k and teachers earn about 45K.
Brilliant survey. Let's not ask physicians if they plan to retire but instead ask if they THINK their colleagues MAY retire. So if 60% THINK many of their colleagues MAY retire it must mean that 60% of physicians are GOING to retire. Excellent logic.
I've been dealing with physicians in one capacity or another for over 15 years. Most of them have been whining about the same thing over the years and threatening to quite or retire but I can't recall any of them acting on that threat.
Research is what I am doing when I don’t know what I am doing - Werner von Braun
Forgive me for a moment if I believe that is out of whack. The direct service provider should get a large portion of the profit. You look back 20 yrs or more the DR were pulling in the big bucks not the administration.
Technical your ok with the best of us striving to run a hospital, I would rather have the best strive to be drs.
What in the hell do teachers have to do with this.
I am just pointing out a cost that is out of control. So I guess I would say yes there is probably to much administration in gov and schools.
Well if 6 out 10 doctors made so much money that they can retire on a whim - they are getting paid too much.
The 2 are in NO way mutually exclusive and in many cases the head of the hospital is a doctor. Also, doctors income is based on many factors, specialty being key, but Insurance companies and Medicare reimbursement play a much bigger role than administrators.
Sorry, but you do not display any evidence of comprehension of how complicated hospital operation are, especially given the myriad of regulatory hoops they must jump through.
This. There are many layers of administration and they almost never add any value to the mission of the hospital. Hospitals function like big govt in this way. A bunch of people on the dole sucking off the makers. In a hospital, the docs are the makers and the admins are the takers.
I don't agree with you very often, but you're dead on here.
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