Restaurant Chains Cut Estimates for Health-Law Costs
gimmesometruth27
St. Fuckin Louis Posts: 23,303
why the about face now?
i thought obamacare was going to kill businesses??
Restaurant Chains Cut Estimates for Health-Law Costs
http://finance.yahoo.com/news/restauran ... 00077.html
Restaurant owners have been fierce critics of the health-care overhaul law, fearing that its mandate for employers to offer insurance more broadly will drive up costs and deter hiring.
Now, some operators say the law may not be that costly after all. They say many employees won't qualify for coverage, and many of those who do qualify will decline company-offered insurance.
Wendy's Co. (WEN) initially estimated the health-care law would increase the cost of operating each of its 5,800 U.S. restaurants by $25,000 a year. But Chief Financial Officer Steve Hare told an investment conference on March 14 that executives have cut the estimate by 80%, to $5,000 a year, primarily because they expect many employees to decline the insurance offering.
"It is still going to be an additional cost that both the company and our franchisees will have to absorb, but we think it is going to be manageable," Mr. Hare said. A Wendy's spokesman said the company continues to refine its cost estimates and it would be "premature" to discuss them further.
Executives of other restaurant chains, including Chipotle Mexican Grill Inc. (CMG), Jack in the Box Inc. (JACK) and Popeye's Louisiana Kitchen, have offered similar cost estimates in recent months.
They say many employees will decline company-offered insurance, either because they can get insurance through Medicaid or a family member, or because they prefer to pay the penalty for not having health insurance. The penalty next year will be as low as $95 next year, much less than most employees will be asked to pay through company-sponsored insurance plans.
The comments suggest that some people may fall through the cracks in the law and remain uninsured, at least for a time.
AFC Enterprises Inc. (AFCE), operator of the Popeye's chain, is among the employers that has few takers for its current plan. Ralph Bower, Popeye's president-U.S., said in an interview that fewer than 5% of employees have signed up for a plan that carries high deductibles and costs $2.50 a week. So he doesn't expect many more employees to enroll next year, when employees likely will have to pay about $25 a week for a plan offering more coverage.
"It's just not affordable for employees," Mr. Bower said.
Instead of buying insurance, Mr. Bower expects many employees will choose to pay the $95-a-year fine for being uninsured. "Do you want to pay $100 a month for health care, or are you going to pay a $95 fine that comes out of your income-tax return at the end of the year?" he said.
"We believe most people do want the security provided by quality, affordable health insurance," said Erin Shields, a spokeswoman for the U.S. Department of Health and Human Services. When Massachusetts adopted a similar health-care law, she said, the percentage of people enrolled in employer-sponsored insurance increased.
"That's a dynamic that everyone is watching closely," said Paul Dennett, senior vice president, health policy at the American Benefits Council, a group of big employers, most of whom already offer health insurance. "No one really knows yet the extent to which individuals will sit on the sidelines."
Beginning in January, the law requires businesses with more than 50 employees to offer health insurance to employees who work an average of at least 30 hours a week, or pay a fine. The law sets standards for the policies, including how much employees can be required to pay. Employers who offer policies that meet those requirements won't have to pay penalties, even if their employees don't sign up.
Restaurant operators and other retailers are being closely watched because they employ many part-time and uninsured workers.
The Kaiser Family Foundation said 45% of retailers, including restaurants, offer health benefits, compared with 61% of all employers; among those that offer insurance, only 40% of employees are covered, compared with 62% in all industries, the foundation said.
The Congressional Budget Office estimates that by 2023, seven million fewer people will be covered by employer-sponsored insurance, while more will be covered by Medicaid and others will be covered by government-run exchanges.
To be sure, many restaurant operators still worry about the law, particularly as the penalties for being uninsured increase to $325 in 2015 and $695 in 2016. The higher penalties may prod more employees to accept employer-offered insurance.
McDonald's Corp. (MCD) said it hasn't changed an earlier estimate that complying with the law will cost $10,000 to $30,000 per restaurant.
Scott DeFife, head of government relations for the National Restaurant Association, said many restaurant operators will have to offer health insurance for the first time next year. Others are bracing for increases of 30% to 40% in their health-care premiums, he said. As small businesses, they will face bigger cost increases than the national chains, he said.
As cost estimates decline, some are muting criticism of the law. Nigel Travis, chief executive of Dunkin' Brands Group Inc., which operates Dunkin Donuts (DNKN) and Baskin-Robbins, lobbied the Obama administration—unsuccessfully so far—to lift the threshold for workers who have to be offered insurance to 40 hours per week, from 30 hours per week.
But Mr. Travis told investors March 8 that the additional costs stemming from the law "are not as high as some people have said." He added, "We feel that without increasing prices, we can mitigate those costs very easily." A Dunkin Brands spokeswoman declined additional comment.
Outside of restaurants, big retailers that already offer insurance say they expect little impact from the law.
Whole Foods Markets Inc. (WFM) founder and Chief Executive John Mackey compared the law to "socialism" and "fascism," though he later apologized for the latter. But Mr. Mackey's co-CEO, Walter Robb, told an investor conference on March 5 that the grocery chain wouldn't be greatly affected because it already offers insurance to three-quarters of its employees.
"We didn't need a mandate," Mr. Robb said. "It's not a big change, in some respects, for us." A Whole Foods spokeswoman declined additional comment.
Likewise, the U.S. president of Wal-Mart Stores Inc. (WMT) said the nation's largest private employer will have to make few changes because of the law. "We feel like we can absorb that in our business," Bill Simon told an investor conference on March 5. Wal-Mart declined additional comment.
Last November, Jerry Rebel, chief financial officer of Jack in the Box Inc., was among the first to say that the costs to restaurant operators would not be as high as feared.
Mr. Rebel estimated that the insurance mandate will increase costs for the operator of Jack in the Box and Qdoba restaurants by roughly $10,000 per outlet. He said the company could offset the additional costs by raising prices less than 1%. "We are actually assuming that it's not going to be a huge impact," he said.
Jack in the Box already offers health insurance to any employee who has worked at least three months, but only about 20% use it, Mr. Rebel said. He said he doesn't expect that number to change significantly next year.
i thought obamacare was going to kill businesses??
Restaurant Chains Cut Estimates for Health-Law Costs
http://finance.yahoo.com/news/restauran ... 00077.html
Restaurant owners have been fierce critics of the health-care overhaul law, fearing that its mandate for employers to offer insurance more broadly will drive up costs and deter hiring.
Now, some operators say the law may not be that costly after all. They say many employees won't qualify for coverage, and many of those who do qualify will decline company-offered insurance.
Wendy's Co. (WEN) initially estimated the health-care law would increase the cost of operating each of its 5,800 U.S. restaurants by $25,000 a year. But Chief Financial Officer Steve Hare told an investment conference on March 14 that executives have cut the estimate by 80%, to $5,000 a year, primarily because they expect many employees to decline the insurance offering.
"It is still going to be an additional cost that both the company and our franchisees will have to absorb, but we think it is going to be manageable," Mr. Hare said. A Wendy's spokesman said the company continues to refine its cost estimates and it would be "premature" to discuss them further.
Executives of other restaurant chains, including Chipotle Mexican Grill Inc. (CMG), Jack in the Box Inc. (JACK) and Popeye's Louisiana Kitchen, have offered similar cost estimates in recent months.
They say many employees will decline company-offered insurance, either because they can get insurance through Medicaid or a family member, or because they prefer to pay the penalty for not having health insurance. The penalty next year will be as low as $95 next year, much less than most employees will be asked to pay through company-sponsored insurance plans.
The comments suggest that some people may fall through the cracks in the law and remain uninsured, at least for a time.
AFC Enterprises Inc. (AFCE), operator of the Popeye's chain, is among the employers that has few takers for its current plan. Ralph Bower, Popeye's president-U.S., said in an interview that fewer than 5% of employees have signed up for a plan that carries high deductibles and costs $2.50 a week. So he doesn't expect many more employees to enroll next year, when employees likely will have to pay about $25 a week for a plan offering more coverage.
"It's just not affordable for employees," Mr. Bower said.
Instead of buying insurance, Mr. Bower expects many employees will choose to pay the $95-a-year fine for being uninsured. "Do you want to pay $100 a month for health care, or are you going to pay a $95 fine that comes out of your income-tax return at the end of the year?" he said.
"We believe most people do want the security provided by quality, affordable health insurance," said Erin Shields, a spokeswoman for the U.S. Department of Health and Human Services. When Massachusetts adopted a similar health-care law, she said, the percentage of people enrolled in employer-sponsored insurance increased.
"That's a dynamic that everyone is watching closely," said Paul Dennett, senior vice president, health policy at the American Benefits Council, a group of big employers, most of whom already offer health insurance. "No one really knows yet the extent to which individuals will sit on the sidelines."
Beginning in January, the law requires businesses with more than 50 employees to offer health insurance to employees who work an average of at least 30 hours a week, or pay a fine. The law sets standards for the policies, including how much employees can be required to pay. Employers who offer policies that meet those requirements won't have to pay penalties, even if their employees don't sign up.
Restaurant operators and other retailers are being closely watched because they employ many part-time and uninsured workers.
The Kaiser Family Foundation said 45% of retailers, including restaurants, offer health benefits, compared with 61% of all employers; among those that offer insurance, only 40% of employees are covered, compared with 62% in all industries, the foundation said.
The Congressional Budget Office estimates that by 2023, seven million fewer people will be covered by employer-sponsored insurance, while more will be covered by Medicaid and others will be covered by government-run exchanges.
To be sure, many restaurant operators still worry about the law, particularly as the penalties for being uninsured increase to $325 in 2015 and $695 in 2016. The higher penalties may prod more employees to accept employer-offered insurance.
McDonald's Corp. (MCD) said it hasn't changed an earlier estimate that complying with the law will cost $10,000 to $30,000 per restaurant.
Scott DeFife, head of government relations for the National Restaurant Association, said many restaurant operators will have to offer health insurance for the first time next year. Others are bracing for increases of 30% to 40% in their health-care premiums, he said. As small businesses, they will face bigger cost increases than the national chains, he said.
As cost estimates decline, some are muting criticism of the law. Nigel Travis, chief executive of Dunkin' Brands Group Inc., which operates Dunkin Donuts (DNKN) and Baskin-Robbins, lobbied the Obama administration—unsuccessfully so far—to lift the threshold for workers who have to be offered insurance to 40 hours per week, from 30 hours per week.
But Mr. Travis told investors March 8 that the additional costs stemming from the law "are not as high as some people have said." He added, "We feel that without increasing prices, we can mitigate those costs very easily." A Dunkin Brands spokeswoman declined additional comment.
Outside of restaurants, big retailers that already offer insurance say they expect little impact from the law.
Whole Foods Markets Inc. (WFM) founder and Chief Executive John Mackey compared the law to "socialism" and "fascism," though he later apologized for the latter. But Mr. Mackey's co-CEO, Walter Robb, told an investor conference on March 5 that the grocery chain wouldn't be greatly affected because it already offers insurance to three-quarters of its employees.
"We didn't need a mandate," Mr. Robb said. "It's not a big change, in some respects, for us." A Whole Foods spokeswoman declined additional comment.
Likewise, the U.S. president of Wal-Mart Stores Inc. (WMT) said the nation's largest private employer will have to make few changes because of the law. "We feel like we can absorb that in our business," Bill Simon told an investor conference on March 5. Wal-Mart declined additional comment.
Last November, Jerry Rebel, chief financial officer of Jack in the Box Inc., was among the first to say that the costs to restaurant operators would not be as high as feared.
Mr. Rebel estimated that the insurance mandate will increase costs for the operator of Jack in the Box and Qdoba restaurants by roughly $10,000 per outlet. He said the company could offset the additional costs by raising prices less than 1%. "We are actually assuming that it's not going to be a huge impact," he said.
Jack in the Box already offers health insurance to any employee who has worked at least three months, but only about 20% use it, Mr. Rebel said. He said he doesn't expect that number to change significantly next year.
"You can tell the greatness of a man by what makes him angry." - Lincoln
"Well, you tell him that I don't talk to suckas."
"Well, you tell him that I don't talk to suckas."
Post edited by Unknown User on
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Comments
I think the article explains the answer to your questions. They believe most people will remain uninsured and choose to pay the penalty or buy a cheaper option with possibly less coverage. Pretty simple. They overestimated how many of their employees would purchase insurance through them.
It is terrifying when you are too stupid to know who is dumb
- Joe Rogan
This year my company changed things to the low plan they had last year. Was among 3 employees could choose. Now its just the one. Higher deductables ,no health savings plan included like before.
The last thing is rather telling. The assumption that many employees would qualify for medicaid.
Not today Sir, Probably not tomorrow.............................................. bayfront arena st. pete '94
you're finally here and I'm a mess................................................... nationwide arena columbus '10
memories like fingerprints are slowly raising.................................... first niagara center buffalo '13
another man ..... moved by sleight of hand...................................... joe louis arena detroit '14
"Well, you tell him that I don't talk to suckas."
All these businesses are going to pass the additional costs on to the public.
It's shocking to think that people think they're actually getting something that they're not paying for. We're all paying for each other's health care and lining the pockets of the insurance companies while we're at it.
That's how it works when the government mandates businesses to provide benefits for employees. It essentially becomes just another tax.
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
Yes, but many of them were smart enough to not name the additional costs on the menu. Papa John's need to use his company to make a political statement was bad business that turned off many customers. I for one have not been back. If his sales and profits are down he bears much of the responsibility for it.
"...I changed by not changing at all..."
he huffed and puffed about it publicly and made it a political statement. i have not been back, and i am not going back. his pizza sucks anyway. maybe if he did not give away 2 million free pizzas during the nfl playoffs he might have a little more profit to play with...
"Well, you tell him that I don't talk to suckas."
seems like the worst business decision ever.
and their pizza does suck
It is terrifying when you are too stupid to know who is dumb
- Joe Rogan
"Well, you tell him that I don't talk to suckas."
Neither he nor almost any other business owner is EVER going to just give extra MANDATED benefits without passing it on to the customers and employees.
Legislation like Obamasurance essentially ALWAYS becomes another tax on the public.
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
as consumers we can go to other places who don't bitch about having to do the right thing by their employees.
he publicly, purposely exaggerated how much it was going to impact his business, just like all of the other franchises in the OP.
"Well, you tell him that I don't talk to suckas."
I get it and agree.
My point is, when something like this passes, they are all going to pass along the costs to the public so I'm not sure why so many people support these types of bills.
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
my whole entire gripe with the whole thing is that these people threw a public hissy fit and said in a cavalier manner that they intend to pass it on to the customer as a direct result of obamacare. they could have come up with a different way to say it. they did not have to do it the way they did. they acted like petulent children who, out of spite, were passing the increased costs on to customers. they cried about it. they also completely overestimated the effects it would have on their businesses and completely overestimated the actual costs involved. they tried to sway public opinion against obamacare, and this article shows that they did not have their facts straight. and now, all of a sudden, they do.
"Well, you tell him that I don't talk to suckas."
They really think people are just going to piss away $695 a year for NOTHING?
don't get me wrong, i fucking HATE this stupid ass fucking law.
But if they are gonna force me to fucking buy something,
i'm gonna fucking buy it...
Not just hand them cash because they put a gun to my head.
At the very least, i'm going to hand it to their buddies, the insurance companies.
Also.
It's $695 in 2016 for a single person.
AND THEN IT "RISES WITH INFLATION".
oh boy.
:roll: :roll: :roll:
If I opened it now would you not understand?
twice
but i believe the solution to a health care crisis lay at the top
the head and heart of this monolithic money-driven machine
not with the little guy
"what a long, strange trip it's been"