EW’s supermarket chain officials ‘check out’ health care bill’s impact
Posted: Thursday, April 22, 2010 9:57 pm
By: John Brannon, Staff Reporter
By JOHN BRANNON
After nine months of research by a corporate team, Ken Pink characterizes the impact of the new health care reform law as “kind of scary.”
“We see potentially somewhere up to 200 to 300 positions being eliminated because of the health care bill,” he said. “We’ll just have to get by with fewer people to pay the bills.”
Pink is president and chief operating officer of E.W. James Supermarkets Inc., a Mid-South grocery chain headquartered in Union City.
“It will have a financial impact on our company and it will have an impact on the prices of the product, which in this case is groceries. It will have an impact on the services we offer the community,” he added.
The corporation’s roots reach far into the past to 1934 when its founder, the late E.W. James, bought a small grocery store at Hickman, Ky. A family-run business, it grew steadily, establishing new stores in communities far afield from Hickman. Today, its network of retail outlets includes 24 stores in four states and a workforce of about 1,100 employees.
As you might imagine, managing so large a conduit for food to utimately arrive on thousands of tables is more, much more, than assigning a price to a dozen eggs or a loaf of bread. Along with other demands of day to day operations, it also means ensuring compliance with a plethora of local, state and federal laws affecting the retail marketplace.
For Pink and thousands — nay, tens of thousands — of other businessmen in these United States, compliance with the new health care law will be their biggest challenge yet.
A few months ago, Pink appointed some corporate officials to study what was a headline grabber of the day as well as the object of much scorn, derision and street demonstrations — the Obama administration’s health care reform bill.
The corporate team included Joe Wilson, director of management awareness and labor schedule; Amanda Pugh, director of human resources; and Steve Hilton, director of public relations and marketing.
Pink and the trio of officials met with The Messenger last Thursday at corporate headquarters to discuss it.
“We’ve been collecting data from Blue Cross-Blue Shield, from associates of the Grocery Association and from every resource we possibly can to get more information,” Wilson said.
Tip of the iceberg
The bill in its final form was signed into law by President Obama on March 30. The bulk of the changes imposed by the new law won’t “kick in” until January 2014.
According to The Messenger’s research, it would cost about $940 billion over the first 10 years and would provide or subsidize health care coverage to 32 million persons currently uninsured.
And those provisions are the tiny tip of the iceberg.
Pink said that when the bill was first introduced in the U.S. House of Representatives, he asked Wilson, Hilton and Ms. Pugh to “follow it, print it, understand it, so that we would be in front of it rather than behind it. It seems to be that important a piece of legislation to the company.”
What they have gleaned manifests itself in working papers that number 726 pages “and still growing.”
A bleak outlook
“There are hundreds of provisions (in the bill),” Wilson said. “We are still today, like other companies, struggling to understand what the true content of it is.”
And yet, even after months of research, they see through a glass, darkly.
“Not only that, but every time we talk to insurance companies, they don’t know what’s what,” Hilton said.
Like other employers, the corporation provides health care coverage to its employees. It will continue to do so, but it won’t be business as usual. The new law, the team agrees, is a “game changer.”
It provides for hefty fines on those in non-compliance. The research team estimates non-compliance would cost the corporation as much as $1 million a year.
“The (law) doesn’t actually start penalizing in its current form until 2014,” Pink said. “What we would do between now and 2014, we would begin to change part-time definitions, full-time definitions, to try and manage the reduction of numbers (of lost jobs) to the least amount that we could through attrition, rather than having to lay people off,” (meaning don’t fill a position that becomes vacant.)
“But the end result is the same.”
Pink asked Wilson for his latest estimate of the financial impact of the law on the corporation.
Wilson said the only calculation he can make is what it will cost if the corporation provides no insurance, which is about $1 million a year. And what will it cost the corporation even if it complies? “Nobody has the answer for that yet,” he said.
Why? Because there is no data available that tells them what an insurance policy is going to cost on the Exchange.
On the “Exchange”?
Pink said that by 2014, every state has to have either its own, or combined with other states, Exchange where any individual can go and get health insurance if he or she doesn’t want to buy insurance from their employer.
“But the Exchange won’t be there until 2014,” he said.
Wilson said the new law is going to be a nightmare for Ms. Pugh in the corporation’s Human Resources department. Everything will have to be documented and reported to the government. “She’s going to have to have one or two more people just to handle the paperwork,” he said. “I’m sure you’ve heard of probationary employees. Well, this law doesn’t consider that. You’re given insurance immediately when you’re hired. That will create a nightmare, according to what (our sources) tell us. You have to enroll them immediately if you are a large employer. A large employer is (defined as) anybody with more than 50 employees.”
Not only that, Ms. Pugh added, but the law changes the definition of full-time employment from 40 to 30 hours a week.
“We’ll either have to schedule people less than 30 hours a week or just admit they’re full time and offer a benefits package,” Pink said. “So that will shift how we hire and schedule people. We try to hire and schedule people based on what our customers want, not what our insurance company or the government wants. It’s kind of our goal. We are not 100 percent successful, but we work pretty hard at trying to take care of people who work for E.W. James Corp.”
Pink said you tend to look to make the best of whatever situation you’re put into, and that’s what the corporation is doing. He hopes legislators such as Congressman John Tanner see there are provisions in the law that just aren’t going to work and work to make adjustments.
“You have congressmen who don’t even understand it (the bill as passed),” he said. “Everybody in business, just from what we know about it, can see what it’s immediately going to cost us.”
There are some positive provisions, though, he added, such as immediate elimination of pre-existing conditions as a factor in acquiring health care coverage. “And you can cover your dependents now up to age 26,” he said.
Pink said that as corporation president, his 10-year concern is how to attract and maintain associates who want to work. Not just adults but also teens, people who want a job, want to be productive members of society.
“It seems on the surface that gets harder and harder … Do I think the health care system has problems, as currently instituted? Absolutely,” he said. “But when the government starts running stuff, very rarely do I see a benefit to the average man. That’s what concerns me.”
Law of the land
“The president signed this (health care) bill into law,” Pink said. “So from our perspective, it is the law of the land. We are law-abiding and as a company we are preparing, to the best of our ability, to minimize the impact on our associates and on the various small towns that we’re in. It is our goal not to lay off one person. If we have to make changes, it will be through attrition.
“We may change the way we go to market a little bit in some areas, not offer as much customer service or product service. We don’t know that yet, either. We are just working through those scenarios today.
“We do see an overall impact on the company, in terms of jobs. It could be up to 300.”
A good question
Pink asks a rhetorical question, one that should provide much food for thought.
“When did we start to become a country where the government does a better job of running things than private industry does?” he said. “Does that make me a conservative? I don’t know. To me, that’s neither a Republican nor Democratic statement.
“I think business is a better and more efficient operation than government is.”
Published in The Messenger 4.22.10