Alexander: Health Care Law “Loading Up Employers With Costs That Make it More Expensive to Hire,” Keeping Unemployment High

Says jobs are “going away, along with whatever health insurance is offered” in the service and hospitality industry, the nation’s largest employer of “young, low-income, often minority employees”

Posted on March 6, 2013

“If we make it more expensive to hire an employee, we don't give the employer an incentive to hire more people—we discourage the employer from hiring more people”

–Lamar Alexander


Washington, D.C., March 6 – U.S. Senator Lamar Alexander (R-Tenn.), the Ranking Member of the Senate Health, Education, Labor and Pensions Committee, Tuesday said the health care law is “making it more difficult to lower the unemployment rate in this country, which has stayed too high with more than 12 million people still unemployed.” 


Alexander said: “Under the law, employers pay $2,000 if they do not offer insurance or a $3,000 penalty if they offer the wrong kinds of insurance.  We are making it more difficult to lower the unemployment rate in this country—which has stayed too high, with more than 12 million people unemployed—when we keep loading up employers with costs that make it more expensive to hire an employee.  If we make it more expensive to hire an employee, we don't give the employer an incentive to hire more people—we discourage the employer from hiring more people.”


Alexander made his remarks on the Senate floor alongside Sen. Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, with whom he has offered bills to repeal the individual mandate and the employer mandate in the health care law.


Republicans on the Senate Health, Education, Labor and Pensions and Senate Finance committees, with the House Energy and Commerce committee, this week released a joint report titled “The Price of Obamacare’s Broken Promises,” which is based on a compilation of over 30 studies and analyses and outlines estimated premium increases for all 50 states that will result from the rigid mandates and price controls imposed by the president’s health care law. The report finds that recent college graduates with entry-level jobs could see their premiums increase on average between 145 and 189 percent. Some studies estimate young adults could experience premium increases as high as 203 percent.


On the Senate floor, Alexander said: “The president often said in the debates leading up to the health care act that if you wanted to keep the insurance you had, you would be able to do that. I'm afraid it's not working out that way.”


“Businesses around the country are finding out when the health care law goes into effect fully they will either have to supply a certain type of health care insurance, which in many cases -- as many as half the cases according to some studies -- is a better policy and more expensive policy than they are now offering their employees, or they will have to pay a $2,000 tax, to the Internal Revenue Service.  That means the employee, if the business decides to do that, will go into the exchange and lose the employer insurance they had.


“Based on my experience in talking to many businesses, there is going to be a massive rush, by small businesses in particular and by many large businesses, to stop offering employer-sponsored health insurance to their employees and, instead, pay the $2,000 penalty, or tax, which means all of those employees -- most of them lower income employees or middle-income employees -- will lose the insurance they had and be in the exchanges looking for a new insurance policy. 


Alexander added: “Some time ago I met with a large group of chief executive officers of restaurant companies in America.  The service and hospitality industries are the largest employers in America. Restaurant companies are the largest employer of low-income, young, usually minority people.  These are Americans who are often getting their first job or they are Americans of any age who are trying to work their way up the economic ladder, starting with a lower-paying job, a job that doesn't require as many skills, and hoping that instead of having a minimum wage they will end up someday with a maximum wage.  But in order to get that maximum wage they have to get on the ladder.  They have to start somewhere. 


“Here is what I was told.  The chief executive officer of Ruby Tuesday, Incorporated, which has about 800 restaurants, said to me -- and he didn't mind being quoted -- that the cost to his company of implementing the new health care law would equal his entire profit for the company last year and that he wouldn't build anymore new restaurants in the United States as a result of that.  He said he would look to expand outside. 


“Another, even larger restaurant company, said because of their analysis of the law, instead of operating their stores with 90 employees, they would try to offer it through stores with 70 employees.  So that means fewer employees, and it means fewer employees receiving employer health care. 


“Then almost every other restaurant said they were looking for ways to have more part-time employees so they didn't have to incur the expense of the new health care law.  So at least with that industry and those low-income, usually minority, often young employees, the jobs are going away because of the health care law.  And with those jobs goes whatever employer health care insurance was being offered by those companies.”


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