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Opinion: Editorials

Examiner Editorial: Companies cut hours and jobs to dodge Obamacare

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Photo - Pedestrians pass in front of an Olive Garden restaurant in New York, U.S., on Wednesday, Sept. 19, 2012. Darden Restaurants Inc., operators of casual dining restaurants in North America, is scheduled to release earnings data on Sept. 21. Photographer: Victor J. Blue/Bloomberg
Pedestrians pass in front of an Olive Garden restaurant in New York, U.S., on Wednesday, Sept. 19, 2012. Darden Restaurants Inc., operators of casual dining restaurants in North America, is scheduled to release earnings data on Sept. 21. Photographer: Victor J. Blue/Bloomberg
Opinion,Editorial

If you want to know how Obamacare will affect future U.S. employment, look no further than this week's Orlando Sentinel report on Darden Restaurants -- the company that owns popular chains like the Olive Garden and Red Lobster. Currently, all 185,000 Darden employees are offered health insurance, but that's about to change, thanks to Obamacare.

Obamacare fines large companies that fail to offer health insurance to their full-time employees. This would not be a problem for Darden, except that many of its employees have affordable health plans whose coverage is not robust enough to fulfill the requirements of Obamacare's individual mandate. Such plans are popular with restaurants, whose profit margins tend to be small, because they let employers offer benefits at a very reasonable cost. But such plans have coverage limits and other features that Obamacare bans, so they will likely be discontinued beginning in 2014, if not sooner.

And so in order to avoid paying fines or buying massively more expensive health plans that are Obamacare-compliant, Darden is now experimenting with limiting its employees' hours instead. By keeping workers to fewer than 30 hours per week, Darden can categorize them as "part-time." Thus, the company avoids the Obamacare fines and leaves employees to the new government health insurance exchanges, where they may receive subsidies to purchase insurance. At least two other restaurant chains -- White Castle and McDonald's -- are considering similar plans.

So to sum up, Obamacare is leading to fewer hours worked, less tax revenue for the government and bigger government subsidies for health insurance for people who were already insured in the first place. If enough companies do this, Obamacare will become a massive dead weight on the federal budget, even as it does little more than shuffle people from one insurance plan to another, whether they like it or not. The Congressional Budget Office estimates, at the high end, that 20 million workers could see their health plans dropped thanks to Obamacare.

That's how Obamacare will affect the restaurant industry, beginning in 2014. The medical device industry, which is far more closely connected to health care, only has until this January before it is hit with a 2.3 percent industrywide excise tax. Medical device makers have been cutting back in anticipation of the tax. Cook Medical Inc., an Indiana-based manufacturer, announced this summer it was canceling plans to build five plants that would have employed about 1,500 people. Those would have all been manufacturing jobs -- the kind of jobs that President Obama keeps saying he wants to create, but then keeps smothering through his grand agenda.

These are just two examples of industries where there will be less work and workers will be hurt, all because of Obamacare, should its provisions go into effect. Voters should take notice - Obamacare may soon be reaching out to disrupt your job and your health care situation as well.

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