Well, it certainly comes as happy news to this correspondent that the Administration announced this week it will delay health insurance mandates on businesses. Our company has spent a ton of time since last November trying to minimize the expected cost of the mandates -- the initial cost estimates of which for our business came in at three times our annual net income. Our preparation has been hampered by the fact that the IRS still has not finalized rules for how these mandates will be applied to a seasonal work force. Like many retail service businesses, we have studied a number of models for converting most of our work force to part time, thus making the mandates irrelevant for us.
I know this last statement has earned me a fair share of crap in the comments section as a heartless capitalist swine, but the vitriol is just absurd. Many of the folks criticizing me can't or don't want to imagine themselves running a business, so let's say you have an annual salary of $40,000. Now, on top of all your other expenses, the government just mandated that you have to pay an extra $120,000 a year for something. That is the situation my business is in. Are you just going to sit there and allow your savings to become a smoking hole in the ground, or are you going to do something to avoid it? Unlike the government, I cannot run a permanent deficit and I cannot create new revenues by fiat. Congress allowed business owners a legal way to avoid the health insurance mandate, and I am going to grab that option rather than be bankrupted. So are every other service business I know of, which is why I have predicted that full-time jobs are on the verge of disappearing in the retail service sector.
Anyway, it appears that the IRS and the Administration could not get their act together fast enough to make this happen. Not a surprise, I suppose. You and I have both been in committee meetings, and have seen groups devolve into arguments aver useless minutia. This is not a monopoly of the government, it happens in the private sector as well. But in the private sector, in good companies, a leader steps in and says "I have heard enough, it is going to be done X way, now go do it." In government, the incentives work against leaders cutting through the Gordian knot in this way, so the muddle can carry on forever.
There are at least two more shoes that are going to drop, one bad, one good:
- On the bad side, while companies like mine complain about the cost of the PPACA, they are going to freak when they see the paperwork. My sense is that we are going to be required to know in great detail what kind of health insurance policy every one of our employees have, even if it was not obtained through our company, and will have to report that regularly to the government. In addition, there are gong to be new reporting requirements to new agencies for wages and hours. It is going to be a big mess, and my uneducated guess is that someone in the last week or so looked at that mess and decided to hold off announcing it.
But readers can expect a Coyote freak out whenever it is announced, because it is going to be bad. Wal-mart will be fine, it has the money to build systems to do that stuff, but companies like mine with 500 employees but only 2 staff people are going to get slammed. There is a reason government agencies, even government schools, have more staff than line personnel -- they live and breath and think in terms of complex reporting and paperwork. They love it because for many it is their job security. Swimming every day in that water, it is no surprise they impose it without thought on the private sector. This makes it hard for companies like ours that try to have 99% of our employees actually serving customers rather than pushing paper.
- The individual mandate is toast for next year. No way it happens. If the Administration cannot get the corporate piece done on time, there is no way in hell it is going to get the exchanges up and running. And even if they do, some prominent states with political influence with this President, like Illinois and California, likely will not get their exchanges done in time and will beg for a delay.