Train Wreck: You Can't Graft Obamacare onto Existing Business Models

Politico reported last week that the Congressional leadership is having secret talks about how to exempt Capitol Hill staffers from the insurance exchanges required under the Affordable Care Act—aka Obamacare.

No, they wouldn't be exempt from Obamacare, as some conservatives allege, they just wouldn't have to join an insurance exchange where they would have to pay 100 percent of the premium for health insurance.

But it was interesting to hear the reasons given for giving staffers the exemption. They fear a "brain drain" as staffers leave to get other jobs or an outflow of senior aides who would retire because they can't afford the insurance.

Well, duh.

Have they not heard the screams out here in the country as employers cut back hours to make everyone a part-time employee and avoid Obamacare requirements? Have they not heard about the plight of lowly paid employees having their hours cut while being required to pay 100 percent of expensive premiums for individual health insurance?

Have they not heard of companies that also plan to just pay a fine rather than offer health insurance because it's cheaper?

Sen. Max Baucus, D-Montana, an architect of Obamacare, has said he fears a "train wreck" as the program is implemented this coming year. No, he still supports the program. But he fears the implementation will cause massive turmoil.

He's right.

There are entire segments of America's service industry built on the premise of avoiding providing benefits to its employees. In order for them to comply with the goals of Obamacare they would have to restructure the entire way they do business.

Restaurant owners in Tennessee pay servers $2.15 an hour and rely on the goodwill of customers to pay their employees a living wage. Restaurant cooks, who do not get tips, may make $10 or $12 an hour. They are often older than servers, have families, and rely on overtime to make ends meet. Cut back to 30 hours a week they will not be able to support the family. You may see a marked decline in the quality of the food in your favorite Knoxville restaurant if inexperienced younger cooks are put into the kitchen to replace them.

Amusement parks, movie theaters, and tourist attractions in general depend on low-wage workers and they are not about to offer them health insurance.

The companies in America who will provide health insurance for employees probably already do so. The cost of the insurance is built into their budgets and the cost of their products.

If Obamacare was designed to increase affordable health care coverage for the large number of lower-income workers in America, it is becoming a colossal failure.

But since Obamacare is the law of the land, service industries have to understand that the world has changed. They will have scheduling nightmares. Finding reliable employees and loyal employees will be harder to achieve. So perhaps they need to rethink their business model.

In the restaurant, movie theater, amusement park, tourist industry employees tend to be young. Under 35 or even 30. This is the healthiest demographic in America. Given the huge number of these employees the cost of covering them with health insurance is lower than any other age group in America. Many of the companies that employ them make millions in revenue.

If you are the restaurant chain or department store chain that offers health insurance to employees, you can get the best workers. The premiums will likely be lower than plans being offered by large manufacturing firms or large businesses that currently offer health insurance.

You can also get by with fewer workers, using overtime and full-time productive workers. You will have less turnover.

But to believe that Obamacare could be grafted onto the present economic structures of American businesses was naive in the extreme.