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Friday, December 07, 2012

Pity the Multi-millionaires

In their effort to attack the Affordable Care Act, plutocrats have found a hostage to shoot. Last October Investor's Business Daily ran a story about how "Obamacare" hurts minorities. Darden industries, the parent of Red Lobster, Olive Garden and other restaurants, decided that because of the additional cost of providing health coverage to their full-time employees they must split up full time jobs into more part-time jobs which avoids the evil government mandated health coverage. Darden spokesman Rich Jeffers explained that the "razor thin profit margins" in this industry make additional costs far too burdensome.

"Razor thin profit margins" you say? Let's take a look at whot I found in the Mergent Online database of corporate SEC filing data. Salaries of the top management!

Clarence Otis, Chairman of the Board

Andrew H. Madsen, President

C. Bradford Richmond, Senior VP

Robert McAdam, Senior VP

Eugene I. Lee, Division officer

Kim A. Lopdrup, Division officer

These six out of eleven officers have their salaries listed. The other five officers do not. So we have $20,982,788 to pay just over half of the top management. The same report shows a $26,000,000 jump in their benefits costs in 2012 (this includes benefits of all kinds for all employees, not just the additional cost mandated by the Affordable Care Act - we have no break down of that specific cost).

They're not kidding. These multi-millionaires are wringing their hands (through their spokesman) over the "razor thin profit margins" of their industry? Really? Then quit and go lie on a beach for the rest of your lives - you can afford to.

In a recent segment of The Rachel Maddow Show, Ezra Klein explains how this blew up in Darden Industries face. Looks like the rest of the world, including their customers, realize that without hard-working people to cook and serve the food - and also fishermen, farmers, truck drivers and many others responsible for bringing the food to the table - people like Oits, Madsen and the rest have no income. People who do the work actually matter. Also, as Klein says, "No one wants sickly bus boys sneezing on their bread-sticks."

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One more important point usually missed in these discussions: there's more than two answers. There's more then three answers. There may even be more than four. If we actually work the problem - defined as how do we make sure everyone has health care - we have a better solution than the Affordable Care Act. The overhead, as measured by dollars per hundred dollars of reimbursement, for an HMO is about $15. Some a little more, others a little less. Back in the 90s when Consumer Reports studied health care the lowest overhead was Kaiser with $12. But even now Kaiser's costs have crept up. What's the overhead for the evil, inefficient government that can't do anything right for medicare and medicaid? $3. Not kidding. So, if all businesses put the same amount of money into Medicare as they spend on private insurance then, voila!, we extend medicare to everyone. Anyone who wants private insurance will pay a little more than the cost for medicare to obtain better care. But we have a floor no one sinks below and at break-even. If Investor's Business Daily and Darden Industries really cared about ordinary people like the ones who work in restaurant chains, this should not be a problem.

SPERRY, P. (2012, Oct 12). ObamaCare blow to minorities: Restaurants cut full-time slots. Investor's Business Daily. Retrieved from

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