Restaurant Chains Cut Estimates for Health-Law Costs

[Tommy_Carcetti]

Source: Wall Street Journal/Yahoo

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


Read more: http://finance.yahoo.com/news/restaurant-chains-cut-estimates-health-235200077.html

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Yeah, so, um....about that "Obamacare is going to bankrupt us for sure!" stuff......

[littlewolf]

1. why do they think that many employees are going to decline? nt

[Crow73]

2. Money

You pay your staff for under 39hrs at minimum wage, and you offer health insurance for -$100 a check. You think that they can afford that $200 a month?

Until the state/federal exchanges really take off the prices will stay high. Once they do and the states force their own regulatory laws and it becomes so expensive to be part of the exchanges that the insures abandon them forcing the federal government to step in.

Think Japan if that helps.

[kestrel91316]

3. Their employees are probably so poor they will be able to buy on the exchanges and

get fabulous subsidies - either that, or they will qualify for Medicaid.

[Yo_Mama]

5. No, you can't

If the employer offers viable insurance for less than 9.5% of your earnings, and you refuse, you can't buy on the exchange and get a subsidy.

And if your employer offers you insurance for less than 9.5% of your earnings, but the family insurance is completely unaffordable, then your family members can't get subsidies buying insurance off the exchange. They also don't get fined, but they don't have insurance either.

That's the real reason the cost estimates have been lowered. IRS regs.

[TeamPooka]

4. The average U.S. McDonald's had about $2.3 million in sales last year according to Technomic

and the owner can take home 600-700K of that as pure profit.
so 25K should be a no-brainer, an easy cost to absorb for the sake of their employees who help make them the money.
5K isn't even worth talking about as an issue.

[xtraxritical]

6. You think capitalists are going to "absorb" costs? Right...

[Hoyt]

7. That puts owners pitiful plight in perspective. Those poor owners.