Obamacare causes businessman to divest
Shortly after the U.S. Supreme Court voted to uphold the federal Affordable Care Act earlier this summer, a Grand Valley restaurant owner took dramatic steps to avoid paying the cost of mandated health insurance for his employees.
Jeff Leany, owner of several Western Slope restaurants, including Starvin’ Arvin’s in Clifton, told a recent gathering of Freedom! Colorado, a local constitutional rights advocacy group, that he traded away ownership of three of his businesses to avoid having to comply with the act’s coverage.
“I kind of divested myself of my interest of ownership in three of my businesses so that I would fall underneath the full time equivalence of 50 full-time employees,” Leany told a crowd of about 100 people on July 22.
“I have probably about 130 employees altogether in all my businesses ... and that put me into a precarious place due to the fact that if you have over 50 full-time equivalents ... you have to be subject to the (act),” he said.
Starting Jan. 1, 2015, employers with 50 or more full-time workers will be required to offer affordable health insurance to staff working more than 30 hours a week, assuming Congress does not change the law before that time.
Large employers were obligated to buy mandated health insurance starting Jan. 1, but the Obama administration extended that until 2015.
After the meeting, Leany declined to discuss the specifics of his business deal except to say he “did some trading” with four others to accomplish the reorganization.
During his 35 years in operation, Leany said he purchased group health insurance for his employees on three separate occasions, but was forced to drop the coverage when premiums grew too high for his employees to pay.
Limited competition in the Colorado health insurance market made it difficult to find and keep affordable plans in the past, he said.
Cindy Petersen, an independent insurance agent who specializes in group benefit plans, said Leany’s decision to break up his business in order to avoid the act was a “drastic” approach.
A more common way for low-wage employers who are seeking to avoid the act is to hire more part-time workers and fewer full-time workers, she said.
A report in the July 15 edition of the Wall Street Journal said some industry experts attribute the economy’s recent job gains to an increase in part-time hiring by the hospitality industry, an apparent move to “reduce the reliance on full-timers before the healthcare law takes effect.”
“I don’t know that that is a better approach,” Petersen said. “We’re harming our employees by doing that, reducing their hours because (we) can’t afford to buy health insurance.”
Petersen said another approach offered by some insurers is to allow small groups to renew their health insurance plans for another year in December 2014, which would allow them to delay the act’s requirements for most of 2015.
Leany told Freedom! Colorado that his biggest concern was an uncertainty posed by the law, which made it difficult to plan for the future.
“Looking at all the regulations, and geez, there was such a time of a black spirit that was out there, that I didn’t know exactly what we would be dealing with and how to deal with it and you know, I took the approach of what (Hank) Rearden did (in the Ayn Rand novel, ‘Atlas Shrugged’).”
Rearden, the fictional steel magnate in Rand’s libertarian anthem, gives up his business interests and withdraws from society, along with many other talented businesses executives, until a controlling class of incompetent looters causes its collapse.
“When I started into business probably 35 years ago, I thought it was tough then,” Leany said. “It’s 10 times tougher now than it was then.”
The Affordable Care Act, like other government regulations, discourages free enterprise, he said.
“I enjoy doing business. I enjoy going out and having the challenge that comes along with it, but when the heavy hand of government makes it so difficult that I can’t comply with all the regulations and all the expenses that come along with it, it becomes something that makes it to where I’m not going to go out and do it,” Leany said. “I’m not going to do it to throw money into the government’s bucket.”