Erie businesses prepare for health care law [Erie Times-News, Pa.]

March 25--Nick Scott Sr. said he likes the idea of affordable and universal health-care coverage.

But as one of the owners of Scott Enterprises Inc., the businessman in him is worried as the nation moves toward Jan 14 -- the deadline by which most Americans will be required to have health insurance.

For Scott, who employs about 1,500 people at his hotels, restaurants and resorts, the Affordable Care Act -- commonly called Obamacare -- will mean a dramatic increase in the number of people for whom he will provide benefits.

Employers who have more than 50 full-time employees or full-time equivalents will be required to provide health insurance for those who work more than 30 hours a week.

Scott, who owns both Splash Lagoon Indoor Water Park and Peek'n Peak Resort and Spa, said many of his employees already receive health insurance.

But that number is going to grow, he said.

"It's a substantial number," he said. "It's going to be hundreds of thousands of dollars of increased costs for the company."

Scott said he sees health care as a right for members of a great society. But he also recognizes that money spent on health insurance won't be available to invest or pay for raises.

Critics of the Affordable Health Care Act worry that employers will search for loopholes, possibly cutting the number of full-time positions to avoid providing health-care coverage.

Scott said he can't afford to lose his best people and will provide the benefits needed to keep them.

But as businesses bring on new employees, he said, there's likely to be a tendency toward hiring part-time workers, instead of full-time.

"It's going to happen," he said. "A business is always going to try to control its costs."

Scott isn't alone in that view.

Joe Bell, spokesman for the Youngstown, Ohio-based Cafaro Co., which owns the Millcreek Mall, said many of the business owners he's talked to are bracing themselves for the unknown.

"There is some real anxiety among business people about how are they going to handle this thing," Bell said.

"There are a lot of smaller retailers and smaller businesses who simply won't be able to afford this," he said. "They won't want to hit that 50-employee limit."

Bell wonders if the fear of the unknown might be holding back individual businesses as well as the broader economy.

Others, Bell said, "are going to make damn sure their part-time workers don't work more than 30 hours a week."

Kurt Rankin, economist for Pittsburgh-based PNC Financial Services Group, said he believes that business owners are likely to feel some pain.

But he doesn't expect it will be fatal.

"It's going to slow hiring from what it might have been," he said.

The good news, he said, is that this change isn't exactly sneaking up on anyone. The business community has had time to prepare for a law that was enacted three years ago this month.

"It's built into their mindsets now," Rankin said. "Hiring will be slower, but the (Affordable Health Care) act is not going to drown the economy."

Jim Kurre, professor of economics at Penn State Behrend and director of the Economic Research Institute of Erie, wishes he could be sure that the economy will emerge undamaged.

Like Scott, Kurre said he would like to see everyone have the health-care coverage he or she needs.

But Kurre said he's also a fan of the economic maxim: "There ain't no such thing as a free lunch."

Kurre comes to the issue with a philosophic objection.

"If you say there is a fundamental right to health care, that necessarily implies that someone else will be forced to pay for it," he said. "It reduces that other person's fundamental rights to not have things taken away from them, or to have to work to give things to other people -- which is perilously close to robbery."

But simple economics, he said, suggests a dollars-and-cents reality that someone is going to have to pay the extra cost of expanded coverage.

And that someone is likely to be businesses, their customers, employees and owners, he said.

Higher prices are the most obvious product of increased expenses, Kurre said.

"That is going to make American businesses less competitive," he said. "This is probably going to cost jobs for American businesses."

The bulk of the changes will likely be felt by employers who don't currently provide health-care coverage.

But Kurre expects others also will be affected by sweeping changes included in the Affordable Care Act.

"The rules are going to change," Kurre said. "They (employers) are going to have to devote more back-office time to hiring experts."

And while the Obama administration has touted the money-saving virtues of the government's health-care program, Kurre is dubious.

"My guess is that a lot of employers are going to see their costs go up," he said.

That view was echoed Friday in a Wall Street Journal report that said health insurers are privately warning brokers that premiums could rise dramatically in 2014 because of the health-care law.

Brokers said that rates for some consumers could double, the newspaper reported.

The Department of Health and Human Services disagrees, saying that the law will "make health-care coverage more affordable and accessible."

Jake Rouch, vice president of economic development for the Erie Regional Chamber and Growth Partnership, said he hasn't heard a lot of buzz around that law.

And that troubles him.

Whether one is a fan or a critic, he said, "This is the most significant piece of legislation passed in our lifetime. I found it fascinating how little is being written or said about it."

What he has heard is that owners of some small businesses are being cautious.

"Folks approaching the (50-employee) threshold are approaching hiring in a very cautious manner," he said.

Ultimately, though, he believes it's too soon to take the full measure of the Affordable Care Act.

All that is in place now is a broad structure.

Rules and regulations, many yet to be written, will determine the effects of health-care legislation on both employers and employees, Rouch said.

"The regulations will determine how burdensome or manageable it's going to be," he said.

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