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NYT: Obama-Care To Cost Bakery Half Its Profits

From the New York Times:

Questions Abound in Learning to Adjust to Health Care Overhaul

By JULIE WEED | March 20, 2013

Baked in the Sun is a wholesale baker and distributor of freshly baked pastries near San Diego.

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…

In other words, Obama-Care is going to cost this small business more than half of its profits! What an amazing thing for The Times to report. Of course, they only did so after it is far too late to do anything about it.

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…

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

Which is even more out of their $200,000 profit margin.

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… Ms. Shein… 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.” …

That is, she is considering just firing people. — Or, rather, outsourcing the work.

Meanwhile, we have a remarkably similar tale of woe from the Washington Post:

Health-care law uncertainty grips Old Town Alexandria cafe — and other small businesses

By J.D. Harrison | March 20, 2013

Jody Manor has run a small cafe and catering company for nearly three decades in Old Town Alexandria, only a few blocks from where he was born. Six years ago he purchased an adjoining building, and more recently he started searching for a second location.

Whether he moves forward with expansion depends on the price tag of the requirements mandated by the Affordable Care Act, President Obama’s signature health-care initiative.

Manor’s company employs 45 people. If he brings in just five more, his business would soon be subject to new minimum coverage standards under the 2010 law — and he does not know whether his current health plan would meet this threshold of coverage or how his premiums might be affected…

“These changes are less than a year away, and I still have no information about how much our premiums are going to cost,” said Manor, owner of Bittersweet Catering, Cafe and Bakery. “It definitely gives me pause when thinking about adding another location.” …

Nearly three years after the health-care law was passed, federal regulators have only recently begun to define its terms. Major pieces of the overhaul, such as state-run exchanges that will serve as marketplaces for qualified health insurance plans, have yet to take shape, and several rules remain unwritten. Consequently, the picture remains anything but clear for small-business owners, some of whom have been warned that their premiums may spike and that their current coverage may fall short…

This article rambles on from there, repeating all of the new burdens on small businesses under Obama-Care. It returns to Mr. Manor’s story at the end:

Manor, the Alexandria restaurant owner, says he would delay expansion before cutting back on coverage or moving employees to part-time status…

Does anyone remember how Obama and the rest of the Democrats and the news media claimed Obama-Care was going to be a boon for the economy and especially small businesses, which were being crushed by the rising costs of healthcare insurance? And that if you liked your health insurance plan, you could keep it?

Lies. All lies.

This article was posted by Steve Gilbert on Friday, March 22nd, 2013. Comments are currently closed.

4 Responses to “NYT: Obama-Care To Cost Bakery Half Its Profits”

  1. When the Demonicrats and RINOs have have finally succeeded in ruining the economy – EU style – with onerous taxes and regulations, perhaps they’ll awaken and face their own malignancy. Maybe then they will team up with conservatives and bring forth a new harmonious working relationship, and consult us citizens in true democratic fashion.

    Nah, they’ll blame George Bush.

    • That’s right. When the BALLOONING costs of government-run health care start to hit, there will be more tin cup rattling from out professional beggars in Washington.

      People haven’t caught on that costs NEVER go down, it’s just a starting point, and when the monstrosity is firmly entrenched, it needs more money, like a growing / hungry tumor, and the cost of dismantling it is also too high.

  2. Well, golly. That WAS the point, right?

  3. Profits are bad. How many times have liberals said that? That corporate profits are a sign of capitalism’s inherent “greed”?

    This isn’t a bug, it’s a feature. They want companies to have 0% profits and they won’t stop until we get there.


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