More bad news about Obamacare

Jim and I discussed this on the show this morning and we thought you might like to read the full article.  A recent study by James Sherk of the Herritage Foundation has disclosed that Obamacare will cause unemployment and underemployment of low wage, low skill workers to rise.

We start with this:

The CBO has estimated that the minimum national premium for single coverage will be $5,000 and $12,500 for family coverage. Furthermore, to avoid being fined the employer must not only offer coverage, but also restricts the share of premiums that employees contribute to 9.5 percent of their family income.

The net effect of the CBO’s estimate is that, once Obamacare takes effect, it will cost an employer $27,500 per year to hire a minimum wage employee.  That figure includes not only the employee’s salary, but also employment taxes, unemployment insurance, and, more to the point, the cost of providing Obamacare coverage to the employee.

Here is the problem, though.  Unless that employee can produce at least $27,500 worth of goods or services to the employer, the employer will actually lose money by hiring that employee.  And, there are very few low skill employees who can generate that much revenue for the employer.  Given this, one, or all three of the following things will happen.

First, employers will cancel their group insurance and dump their employees into the newly formed insurance exchanges.  This will drive up the overall cost of Obamacare dramatically as the lower income families need a higher federal subsidy to pay for the insurance the government mandates that they have.

Second, employers will higher fewer low skill employees.  These are the “starter” jobs that the young typically use to learn a trade and climb up the ladder to prosperity.  Without these job openings, unemployment will continue to grow.

And third, employers will only hire the low skill employees for part time jobs as an employer is not required to provide insurance to part time employees.  This option is limited though as Obamacare treats anyone working more than 30 hours a week as full time, and, “aggregates” hours worked so that 2 part time employees working 20 hours a week each, will count as 1 “full time” employee for the purpose of the penalty the employer must pay for not providing insurance.

Far from creating the 400,000 jobs then Speaker Nancy Pelosi (D. Ca.) proclaimed when Obamacare passed, the bill will actually result in fewer jobs. And, the worst part is that the loss of jobs will more severely impact the young, unskilled American than the rest of the workforce, making those people more and more dependent upon government for their very existence.


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The Sound Off Sister was an Assistant United States Attorney for the Southern District of Florida, and special trial attorney for the Department of Justice, Criminal Division; a partner in the Florida law firm of Shutts & Bowen, and an adjunct professor at the University of Miami, School of Law. The Sound Off Sister offers frequent commentary concerning legislation making its way through Congress, including the health reform legislation passed in early 2010.


  1. Anybody but Obama on October 20, 2011 at 3:55 pm

    Its Romney’s fault.

    • phil on October 21, 2011 at 8:30 am

      You mean it’s not Bush’s fault??

  2. sammy22 on October 20, 2011 at 5:20 pm

    As long as the employer can take a deduction for the cost of health insurance, your arguments fail.

    • Dimsdale on October 20, 2011 at 6:17 pm

      The presumption being that this deduction (is that ever worth the actual cash value?) will not be manipulated when the real costs of ?bamacare rear their ugly heads.? At this point, when private insurance has been driven out of business, ?bamacare will be “too big to fail”, right??? And then it will qualify for a bailout….

    • SoundOffSister on October 21, 2011 at 8:21 am

      I’m sorry, Sammy, but your argument fails.? The employer has a deduction,? not an income tax credit for the cost of providing the insurance.? All that means is that the employer does not have to pay income tax on?the $12,500 he spent providing the required insurance.? He still has to pay the $12,500, and that is money out of the employer’s pocket.? Our minimum wage employee with a family of? four, under Obamacare will cost the employer $27,500, as opposed to a lesser amount without the requirements of Obamacare.

  3. sammy22 on October 20, 2011 at 7:27 pm

    A deduction is a deduction. In this case it’s the cost of doing business. If it were not advantageous to the? employers now, the employers would have dumped it. It’s really simple, no need to go deeper into hypothetical scenarios.

    • Dimsdale on October 20, 2011 at 8:05 pm

      Are all those waivers that have been granted to date hypothetical??? Why didn’t those “?bama preferred” companies wait to slurp up that fabulous deduction?? Isn’t a waiver the same as “dumping ?bamacare”?

  4. Mommahan on October 20, 2011 at 7:47 pm

    Deductions or no, ?bamacare does nothing to address the problem of rising healthcare and the fact that Docs stick to those of us with insurance. Case in point: I took my 2 daughters ages 14 & 17 to their pediatrician for school physicals. I was charged $25. bucks per kid for an unnessacary pregnacy test and $50. each to for an “individual” consult where the Doc asked privately “Do you have sex (oral counts she said after my 17 year old said NO), do you smoke, do you drink, do you do drugs? No, okay great: don’t forget to eat your veggies. $50.00 bucks extra each for a total of $400. for each physical…no shots.? How is our President addressing issues like these?

  5. IamTheMapGuy on October 21, 2011 at 8:53 am

    Sammy, you are missing what the SOS is saying.? A deduction is not the same as a credit.? With a deduction, you are simply looking at not paying tax on those dollars.? With a credit, the employer would be receiving a check.??You are saying that a “tax” write off is the same as a credit, which is completely false.? With one you are lowering your taxable income(deduction), with the other you are increasing it (credit).

  6. JBS on October 21, 2011 at 9:03 am

    The net effect is a continued assault on the private sector by, you got it, the One. His dream of a Socialist America continues.
    On the issue of doctors, costs and care received, the costs will only go up and up. Doctors are wedded to tests almost to the exclusion of talking with a patient. It is now standard for a doctor to spend most of the time during an office visit with hie or her face buried in the computer screen, busily typing, editing and while the patient sits. Modern medicine!
    ObamaCare is designed to further drain an already bankrupt treasury.

  7. mynoc3 on October 21, 2011 at 10:06 am

    This was a great annalysis of what an employer must look at before highering a new employee.? This argument could transfer over to the debate about a minimum wage also.? If you raise the cost of an employee, that employee must produce even more to make it worth highering him/her.? As for the debate on the tax deduction,? it’s simple.? If you pay 15% on $100k (paying $15,000), a $10k deduction means you pay $13,500, a $10k credit means you pay $5,000.? That’s the difference.

  8. sammy22 on October 21, 2011 at 11:30 am

    With all due respect to SOS, her post is a “pastiche”. BTW, I did not say the employer would get a tax credit, I said a deduction.? Then, “Unless that employee can produce at least $27,500 worth of goods or services to the employer, the employer will actually lose money by hiring that employee”. By your arguments, the employee will have to do much better than $27,500 for the employer not to lose money. And, thanks for the “lessons” on tax deductions.

    • Dimsdale on October 21, 2011 at 3:35 pm

      You said deduction, as though it offset the cost to hire an employee.? Do you think that is true, i.e. that the deductions will add up to the cost to hire the employee under these new rules?

  9. PatRiot on October 21, 2011 at 12:01 pm

    SOS? – outstanding post.
    We woulndn’t be having this discussion if DC did what most of us do? – fix something instead of replacing it with something unproven.? That, and respect the rights of the individuals.

    But here we are.? So,? I ask will ask Sammy22:??If you want the government to pay for health care, why aren’t you fighting against the government? for?mandating that the businesses?pick up the tab??

  10. sammy22 on October 21, 2011 at 1:06 pm

    @PatRiot: the Government is not paying for healthcare, we do. Either with taxes or insurance premiums (even for those ne’er-do-well, who opt out of getting insurance, break a leg skiing and we pay their hospital etc. tab!). Businesses pick up part of the tab and get a deduction (we do not). BTW, I was for a single payer system, but our elected representatives created a monster!

    • Dimsdale on October 21, 2011 at 3:39 pm

      The difference being that the government wants to be a monopoly that can strongarm you with the IRS.? I would rather have the option to buy what I want or nothing at all (with the stipulation that I can’t get “free” healthcare if I can afford to pay for my broken leg.
      When you look at the horror stories coming out of Great Britain and their single payer system (, it should give us all pause.

    • crystal4 on October 22, 2011 at 8:10 am

      Yes, Dimsdale, the US healthcare system is so great that other countries are falling all over themselves to implement it.

    • Dimsdale on October 22, 2011 at 8:33 am

      Interesting.? I know people that have come here from Canada and Ireland to get procedures done that they couldn’t in their own countries.? And these are not rich folks by any means.? There’s a difference between cheap and good. ??
      You can fly to Cuba now if you like socialized medicine…

    • PatRiot on October 23, 2011 at 7:39 am

      back @ Sammy22? The single payer system may bring in a few more dollars from those who now make too little to pay any tax on their income. ?But it will encourage more people to be?more dependent on the government.
      Single payer?system will cause a huge tax, fee, cost increase on the working American – a hit that most of us?cannot afford.??A hit that takes away our freedom to be charitable to the very organizations that help pay for those truely in need and the ne’er do wells as well.
      So the government will?force you and I to be charitable with money we may or may not have while they?will be seen as the kind benefactor.?
      No, I don’t want any recognition for my charity.
      ?I just want the?freedom to choose where my hard earned money is donated.???

  11. Lucinda on October 21, 2011 at 4:03 pm

    A couple of things.
    First, the CBO’s minimum national premium estimate of $5,000 for single coverage is nearly double what the current premium ($2,747) for a half-way decent POS plan, including prescription coverage, is for a 25-29 year old in a small group (3-9 employees).? So much for reducing costs.
    Second, a business owner does not take on an expense solely for the potential tax deduction. That would be like not paying off your mortgage early so you can keep the tax deduction. It’s more likely the owner takes on the expense because it benefits the business in other ways.

  12. crystal4 on October 22, 2011 at 9:15 am

    Dimsdale, you guys float out that old story about people flying here for surgery. Look for someone who has experienced both systems. I talked to a gentle man who lived in the UK. He laughed when i asked him about the long waits for Md appointments, etc. he said a routine checkup has probably a longer wait time here (depending on your MD) and had an emergency visit to the MD in the UK is? was taken immediately.?
    I am sure I can find someone from canada who came here for surgery for various reasons, like their family here has insisted they be closer, etc.
    91% of canadians feel their system is better than the US

    • Dimsdale on October 22, 2011 at 7:03 pm

      Sorry, but these are real relatives and friends.? They constantly warn me about the “blessings” of government health care.? Of course, there is medical tourism from this country, usually for affordability reasons.? But of course, to do so means that the people in the other country are subsidizing you.? To each his own, but my issue is this: how can we trust the incompetent boobs in Washington to design a functioning health care system???? Particularly one rammed through without reasonable (any?) debate and modifications?

    • crystal4 on October 24, 2011 at 5:18 am

      “how can we trust the incompetent boobs in Washington to design a functioning health care system”
      Seniors love their medicare, Dimsdale.
      You call our current system “functioning”?? The insurance cos. make decisions concerning your health, refusing life saving treatments , refusing needed hospitalization, etc. All while raising premiums sometimes 30%/year.

    • Lucinda on October 24, 2011 at 8:28 am

      Crystal, if the insurance company denies you, at least you have several chances to appeal the denial, which often results in the denial being overturned. If the government is running it, to whom do we appeal?

    • Dimsdale on October 24, 2011 at 9:55 am

      Of course seniors love their Medicare: it is all they have, because the gov’t convinced them it would be all they ever needed.? They really like Medicare Advantage, which ?bama has cut to fund his ?bamacare (among other things totaling at least $500 billion).? If I don’t like the decisions my insurance company makes, I can appeal, as Lucinda states, or go to another company.? Who do I go to when a Berwick appointed administrator decides I don’t rate care in a single payer system?
      It isn’t better because the government does it.

    • gillie28 on October 23, 2011 at 4:25 am

      Um, crystal, i’m very surprised by what your “gentle man” reported to you.? I have a sister, cousins and friends who live in the uk (having been born there myself).? The health care system there can pretty much be summed up in one word: awful – with occasional exceptions.? A relative went in there with a broken ankle bone, had to wait almost all day in agony, was given the wrong kind of treatment, no help getting in or out of hospital, and has been almost crippled by the experience.? The relative is now afraid to go in for treatment to fix the problem they didn’t fix because of fear of ending up worse.? And, sadly, this is fairly typical – i’ve heard many other, first hand horror stories.

    • Dimsdale on October 23, 2011 at 8:59 pm

      What a great money saver: the patients are afraid to go to the doctor!

  13. sammy22 on October 22, 2011 at 10:58 am

    Dims, SOS and the rest keep bringing up the few “horror” stories from Canada, UK etc. They do not bring up the “horror” stories from the US.? Recently I spent some time with an MD from the UK, who among other things, was appalled at the disinformation which is spread about the healthcare in the UK.

    • Sal on October 22, 2011 at 11:40 am

      Sammy22 can you give some examples from the MD from the UK ?

  14. gillie28 on October 23, 2011 at 4:27 am

    Sammy, think every country has their horror stories…some are just more numerous than others.?

  15. gillie28 on October 23, 2011 at 4:44 am

    SOS, great post.? As a cautionary tale, wanted to put this information somewhere and this is as good a place as any.? The EU is now intending to take over the internal finances of every country in the union.? I believe this has been the intent all along and current events are?a great excuse to implement it.? The irony is that the EU administration is hugely culpable in the economic crisis over here.? It was they who poured?in vast amounts of money to poor nations who didn’t have a hope of paying the money back.?

    So, imagine the US government taking over all the finances of each and every state.??Let’s hope taking over health-care isn’t the preliminary stage (although healthcare is IS outrageously expensive in the US – just think change has to be gradual and well thought-out).

  16. sammy22 on October 23, 2011 at 12:01 pm

    @Sal: sorry, the dog ate the list. But, here’s is my “horror” story. Had a hip joint start to fall apart. Waited for 5 mos to be seen by the doctor of my choice. Got spot on operating table for 6 mos later. Joint got infected, after 2 operations joint was removed, but not replaced. After another 4 mos I got a new joint, and waited another 2 mos to get the other replaced. Total cycle time? 17 months, 4 of which were in a wheelchair.

    • SoundOffSister on October 23, 2011 at 6:48 pm

      Sammy, no one should have to go through that nightmare, so I fully understand why you dislike our current system of health care in this country.? But, do you truly believe that adding some 35 million currently uninsureds to the system, with little or no increase in doctors will prevent something like what happened to you from happening again?? As a country, we need to stop what you experienced from occuring to others.? From what I have seen so far, Obamacare will not do that.? It will simply make it worse.? Let’s focus on making your’s the last experience of its kind for anyone in this country, not the first.

    • Dimsdale on October 23, 2011 at 9:04 pm

      Sorry to hear that, sammy.? Can you provide any (anonymous) particulars, i.e. what type of insurance you have etc.?? It would be interesting to examine that.?? As for the doctor of your choice, what’s up with that?

    • Lucinda on October 24, 2011 at 2:56 am

      Sammy, sorry you had to go through that. Two things you said stand out. First, you chose to wait to see a particular doctor, who obviously was very busy, and second, the complication of infection. Not exactly conducive to a quick turn around.
      My story is the opposite. Result of consultation to determine course of action (therapy or surgery) was that I was a definite candidate for total knee replacement. Saw the surgeon (tops in his field) the next day, surgery was 9 weeks later.

  17. sammy22 on October 23, 2011 at 12:08 pm

    @gillie28: some of the issues w/ the EU have to do w/ accepting into the union countries that were not ready for it, e.g. Greece. All it would have taken was a no vote from any of those already in the EU, e.g. the UK. It was countries that poured money into the poor ones, it was the banks who lent the money, and now are scrambling for re-payment. The EU structurally looks more like the US federal system, than people are willing to admit.

  18. gillie28 on October 23, 2011 at 1:44 pm

    Sammy, Agree, partially.? Some countries should not have been admitted to the EU, but the political issues seemed more paramount than the economic ones.? Because of two world wars – mostly centered?in Europe – there is this almost manic attitude amongst EU leadership to?”unify” this continent at all costs.? Again, the major problems are related to human nature and bureaucracy….Brussels and EU organizations are rife with corruption and nepotism.? They live like “fat cats” in Brussels with similar perks and benefits?that are?bequeathed on UN employeesas an absolute right.?

    EU regulations required huge amounts of structural “improvements,” cultural change and agricultural and industrial shifts that generally?benefited France and Germany, penalized countries like Portugal (although I’m certainly greatful for certain hygenic upgrades over here!!!) and left the UK out in the cold as punishment for not becoming a fully-fledged member and retaining some control over their destiny.? The minutiae of??petty rules and regulations that are imposed are incredibly burdensome and costly.? Many have been made with little regard to the uniqueness of countries’ culture and history.? The EU interferes with members’ national…

  19. gillie28 on October 23, 2011 at 1:47 pm

    interests far more than the US govt. does with its states.? As you can tell, I’m not a fan at all.
    p.s. There is a large movement in UK to get out of the?EU altogether.?

  20. sammy22 on October 23, 2011 at 3:08 pm

    The US has had more than 200 years to get “some kind of act” together, and a Civil War to “demonstrate” who rules. According to Perry,? TX also wants out of the federation (good luck) and, frankly, I’d give a near zero chance of the UK getting out of the EU (unless the UK? becomes? the 51st state).

    • Dimsdale on October 23, 2011 at 9:06 pm

      How did the UK do it before the EU?

  21. Lynn on October 24, 2011 at 9:04 am

    Personally, I would take UK gladly. I think they have realized their experiment has failed and some of the Commons have great sense.

  22. gillie28 on October 24, 2011 at 9:33 am

    Sammy, i don’t see how the European Union can survive as is.? it hasn’t made sense to have such unequal economies, such different cultural attitudes to life, ?and have the same expectations for all of them.?
    In Portugal, in order to satisfy the EU and IMF demands, our Value Added Tax has just gone up to 23% for just about everything.? This is in a country where the people are already?suffering badly financially,?and many?out of jobs.? It just doesn’t make any sense.? Businesses are closing down – some temporarily – because they can’t afford the taxes.? How can a country possibly survive intact with that kind of a burden imposed on its people and, remember, it wasn’t the people who caused all these problems.? The socialist govt. which was in control for a long time, spent money like a drunken sailor, borrowed up to the gills, and quite a few pocketed bribes, etc.?
    You can see the EU problems magnified in the current fiscal dilemna….the leaders just can’t agree on what to do, each protecting their own national and personal interests.? They keep postponing making decisions and the longer they procrastinate, the worse it gets.? Sorry, the whole thing is a disaster, and it?pretty much brought the UK to ruin as well.?…

  23. sammy22 on October 24, 2011 at 12:00 pm

    Dims, before the EU, the UK lost an empire, fought wars all over the place including WWI and WWII. Got creamed in the process before being “rescued” by the US.

    • Dimsdale on October 24, 2011 at 2:37 pm

      You see no correlation with their increasing socialism eating the country from within??? Who is going to rescue us, China??? No thanks.? We can rescue ourselves if we try.

  24. sammy22 on October 24, 2011 at 12:07 pm

    @SOS: thanks for the “condolences”. Personally, I’ll take anything over the system we have now. And, Dims, my experience had nothing to do with insurance. It simply had to do with the delivery of health care. Hope it does not happen to you.

    • Dimsdale on October 24, 2011 at 2:41 pm

      Well, you can get bad doctors/care anywhere, which is the point of my reference to a “horror story” several posts back.? Government takeover won’t make it better.? If anything, it will make the system worse.? I have seen nothing to make be believe otherwise.? Why did you wait for the specific doctor that you indicate wronged you?

    • SoundOffSister on October 24, 2011 at 7:44 pm

      Sammy, you nailed it when you said “Personally I’ll take anything over the system we have now.”?
      Personally, I’ll take the system we have now, but, under Obamacare, I will not?have that choice.
      The federal government shouldn’t tell me what my choice must be.? If it does, it isn’t a choice, it is a mandate.

  25. gillie28 on October 24, 2011 at 2:34 pm

    Sammy – I can hardly believe how dismissive you were about the second world war and the UK’s incredibly brave fighting and resistence, and what the country suffered at the hands of German .? Actually, I’m stunned.? London?withstood an incredible onslaught during the Blitz, as did many other cities and towns in Britain.? Perhaps you need to?talk to the people who survived it while there are still some left to feel some empathy.? My mother’s street was bombed and her best friend, who lived a couple of doors down, was?killed.?
    As for the?US,? yes the help (when it finally came) was invaluable, and the US military suffered great losses.??But it came only during the last couple of years of the war because american industrialists were making a fortune selling Hitler materials for armaments and?because of anti-semitism among much of US leadership.? If it hadn’t been for Pearl Harbour, and Germany and Italy declaring war on the US in 1941,??the US?probably would have kept out of it.? War in Europe: 1939-1945.? US entered in Nov. 1942.? It would have saved?hundreds of thousands?of lives if the US had entered earlier, perhaps including those of my mother’s best friend and her entire family.? Your comments bothered me because my…

    • Dimsdale on October 24, 2011 at 2:43 pm

      Good point.? We even “rescued” former enemies!? And all these countries could rest easy knowing that the U.S. would be there to protect/help them while they spent all their money on socialized medicine etc.? Who is going to “rescue” us?

  26. gillie28 on October 24, 2011 at 2:42 pm

    dad and uncles fought during that time, spoke of it very reluctantly and modestly;?those in England?were in constant danger in England, severely rationed and lost many loved-ones.? More than a million houses were severely damaged or destroyed in London alone.? Can you imagine your town being bombed for 76 nights in a row?

    “Lost an empire” – you still believe in colonialism??? Most of the colonies are living in the uk right now, anyway.??Fought wars all over the place??? If you mean in centuries past, then you’d have to include practically the entire world in that condemnation.?

  27. sammy22 on October 24, 2011 at 2:45 pm

    Guess what gilllie28: I was bombed too. My parents ran for the hills in carrying me while the sirens wailed in the middle of the night. And then I was bombed again.? Comparing war stories is not very constructive.

  28. Steve M on October 24, 2011 at 6:07 pm

    For what it’s worth, I have multiple friends who live in either Canada or the Bahamas who chose to come to the United States for procedures, or had procedures done here while they were here. When there was a choice, there was no doubt they were heading to the states … except for having kids. Americans who were in the Bahamas elected to have their kids born in the Bahamas, of course it was at the private hospital in Nassau, not at PMH.

  29. sammy22 on October 24, 2011 at 7:58 pm

    I think it’s wonderful that people in Canada or the Bahamas have the time and the money to travel and stay in the US for medical procedures. I recall that Sophia Loren went to Switzerland to have her babies. That is wonderful too. But what is the point? Unfortunately, in the US we have millions w/o health insurance and w/o the means to go to Switzerland either.

    • Dimsdale on October 25, 2011 at 3:26 pm

      As I noted, the people I know are no “Sophia Lorens” (in looks or money!), just people that need procedures done.? I think the point is that Loren didn’t want to have her babies in Italy for some reason. ? How about the Canadian politicians that come to the U.S. for medical procedures??? You didn’t bring those up.

  30. sammy22 on October 25, 2011 at 5:54 pm

    If one has the means/money one can go any place one desires. Unfortunately, most people in Canada or the US are not Canadian politicians. I would even bet that some people of means go to places other than the US for procedures/treatments. I seem to remember that Steve McQueen went to Mexico for treatments that he could not get in the US. Can one draw any general conclusions from that? Remember when people went to South Africa to get heart transplants?

    • Dimsdale on October 25, 2011 at 9:34 pm

      But isn’t the whole point that the single payer system that is being foisted on us is supposedly superior?? Why would anyone, regardless of income, leave a “better” system to come here?? As for treatment that you can’t get here, it is true that the FDA adds about a decade to drug and other treatments in this country.?? That is good or bad, depending on your situation.? As for McQueen, he went to Mexico to get Laetrile, some sort of apricot derivative that has never been shown to work.? He was grasping at straws for the cancer he had.? As for heart transplants, Barnard did the first in S. Africa, but the first in the U.S. was only a year later.? I think that was just chance, and Barnard was considered the “expert” in this new field, so he drew more patients initially.?? It wasn’t because they were unavailable or less effective here.? BTW: there is a dual public/private healthcare system in S. Africa, with the private sector having the better care (


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