GO BIG OR GO HOME
Posted on 07/04/2010 11:03:57 PM PDT by KentTrappedInLiberalSeattle
The White Castle hamburger chain fears that a health insurance reform law adopted earlier this year will put its profits on a downward slide.
The Columbus-based family owned restaurant chain - known for serving small square hamburgers called "sliders" – says a single provision in the bill will eat up roughly 55 percent of its yearly net income after 2014.
Starting that year, the bill levies a $3,000-per-employee penalty on companies whose workers pay more than 9.5 percent of household income in premiums for company-provided insurance.
White Castle, which currently provides insurance to all of its full-time workers and picks up 70 to 89 percent of their premium costs, believes it will likely end up paying those penalties. The financial hit will make it hard for the company to maintain its 421 restaurants, let alone create new jobs, says company spokesman Jamie Richardson. White Castle employs more than 10,000 people nationwide, and more than 1,200 in Ohio.
Though advocates of the health insurance bill say its reforms will boost employment, House Republican Leader John Boehner of Ohio, a vocal foe of the changes, says White Castle's analysis shows how the law's "job-crushing" impact will be most severe in lower-income areas, where jobs like those at White Castle are most needed.
"The irony is that in the name of expanding health care coverage, the administration is making it harder than ever for unskilled workers to get started in the workforce," Boehner said in a missive on White Castle's plight.
Boehner's predictions don't mesh with White House Council of Economic Advisors estimates that health care reform will create 320,000 jobs in upcoming years. The White House has said employees at larger companies aren't likely to notice any difference in their insurance coverage, and that changes in the bill will particularly help small businesses by driving down their premium costs and making it easier for them to insure workers.
"While opponents of reform have raised concerns that some of the provisions in the President's proposal will harm small businesses and their employees, the facts, figures, and discussion below show that the proposal will mean tax cuts, no new requirements, and numerous other benefits," said a blog posting from the group's chair, Christina Romer, and its senior economist, Mark Duggan.
That's not how the National Council of Chain Restaurants sees it. Restaurant group vice president Scott Vinson says the entire restaurant industry will have trouble dealing with costs the bill imposes in 2014, including a $2,000-per-worker penalty that companies with more than 50 employees must pay if their workers end up purchasing federally subsidized insurance rather than getting insurance from their employers.
"There is the expense of actually providing the insurance, then the expense of not providing insurance," says Vinson. "It will be expensive either way."
George Ebinger of New Jersey, who owns several International House of Pancakes restaurants, says the penalties for not insuring his 140 workers will cost roughly half as much as insuring them. He figures he will have to raise prices and possibly lay off workers to come up with the $220,000 he anticipates the penalties will cost.
"We are still figuring out how to deal with this," says Ebinger. "Ultimately, either businesses will close or consumers will pay more."
Problems will be felt throughout the retail industry, which employs many entry-level workers, says National Retail Federation vice president Neil Trautwein. He says employers will face tough choices when the mandates become effective in 2014.
"We do worry about this discouraging employment, particularly when employment hasn't taken off," says Trautwein.
But White House Office of Health Reform Director Nancy-Ann DeParle says 97 percent of the nation's companies won't pay any penalties under the new law.
"The principle underlying this bill is: if you don't offer coverage and you have workers who the taxpayers are supporting to get their coverage, than you must make a relatively small contribution," says DeParle. "I understand that they don't like it and believe it will cut into their profits, but it is a relatively small contribution to defray costs to taxpayers."
Steven Kreisberg of the 1.4 million-member American Federation of State, County and Municipal Employees union, questions White Castle's calculations. His union represents food service workers in Ohio public schools and other institutions.
He figures many of the White Castle workers who would end up paying a significant amount of their income for premiums would opt to buy less expensive coverage from a federal exchange.
"Let's not forget that since the worker is declining their coverage, they don't have to pay insurance for that worker," says Kreisberg, the union's health care policy director. "So they would be saving money at the same time as they are paying the penalty."
White Castle recognizes it won't continue paying health insurance bills for workers who buy insurance on the federal exchange, but Richardson says the company predicts its insurance costs would still rise because its healthiest young employees, who make the least money, would be most likely to transfer to the federal program. An exodus of healthy workers from the company's insurance plan would drive up costs for those who remain, the company forecasts.
White Castle, which began offering health insurance to workers in 1924, is also examining whether it would make financial sense for the company to eliminate health insurance coverage altogether and have all its employees buy insurance on the federal exchange, says Richardson.
"It would be incongruent with how we run our business, but we have to think that through," says Richardson. "No matter what, we will do what's best for our team members."
"So they would be saving money at the same time as they are paying the penalty."
WHOA!
My head just spun around 360o.
(I think I hurt my neck.)
They constantly taunt me on television. TEH DEVILS!!1!
The only White Castle here in Southern Delaware is our Congressman.
Good to see you around, Kent.
One of the things I miss living out here in Arkansas, White Castles! Once you get past St. Louis, they disappear :( Whenever we go back to Indiana to visit family, we try to pay a visit to a White Castle. The kids love them too :)
My dad moved down to the South for his job after he and Mom divorced. He dearly missed White Castles, and whenever my grandparents or anyone from up north would come to visit, they would bring Dad his fix, LOL.
Mess is too light a term for the bureaucratic, administrative, and financial hell these clowns intend to visit upon flyover country.
"He figures many of the White Castle workers who would end up paying a significant amount of their income for premiums would opt to buy less expensive coverage from a federal exchange."
The goal of the socialist bill explained clearly, and by a union guy.
“I don’t think any of them have the slightest idea what they’re even trying to do. It’s just a question of how long the health care and insurance industries can carry on before they start getting slammed with arbitrary and oppressive requirements.”
That’s exactly what the functionairies did in Hitler’s fascist Germany, as outlined in the book “The Vampire Economy.” Arbitrary and capricious rules carried out by clueless bureaucrats. Fascism has infected this country since the 1930s. It needs to be identified as fascism, so people can be sufficiently horrified and begin the process of ridding themselves of the “vampires.”
Dooya recall ROYAL CASTLE --- Ft.Lauderdale and environs?
Yes, there are.
Me too. And the closest one to me is an hour’s drive!
Man, I love memories like that. Your Dad was a very lucky man!
Hmmm, not La Casa Blanca?
Are there still George Webb’s in Milwaukee?
“Yes, there are.”
That makes me happy! I practically lived in the one on Brady Street!
He was! I just wish someone would bring me some out here! My mom and stepdad drove out in their RV back in the spring-should have made them stop in St. Louis for some, LOL.
Unfortunately, Dad died back in 1989 of accidental drowning at the age of 38, when I was 16, and my brother and half-brother were 13 and 7. He passed on his looks to me, and also his love of history and White Castles :)
I was about to speculate that if Krystal’s sliders aren’t as tasty or moist that they probably don’t have White Castle’s time consuming, yet vital, little holes in them.
Only difference between a Krystal and a White Castle is the mustard. The WC does not come with mustard.
So, if I read the article correctly, it’s a $3000 fine/tax if their employees have to pay more than 9.5% of their premium cost but they only pay $2000 if they don’t provide insurance at all. Sounds like a no-brainer to me. “Sorry folks, it’s better for the company to discontinue your insurance coverage.”
That also makes me think that this whole scheme is set up to intentionally fail so the communists can use it as the excuse to usher in the single-payer scheme they wanted all along.
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