The passage of national health care legislation, which President Obama signed into law March 23, is causing indigestion for some small- and medium-sized U.S. businesses.
Several tire dealers told Tire Business they oppose the new law, fearing it will have dramatic and negative consequences for businesses and consumers alike, who already are struggling in a down economy.
Andy Chalofsky, co-owner of Chalfont, Pa.-based wholesale tire distributor Network Tire Inc., said he believes the decision will make it harder for his company to stay competitive and generate a profit.
“The problem we face, especially being in the tire business and especially this year, is we've had to lower our margins and work real close to stay competitive and keep our market share, and there's not a lot of room left in there to add extra expenses and revamp the healthcare system.
“We don't know what's going on and how it's going to affect us, but I can't in any way see that it's going to be positive.”
Mr. Chalofsky—who doesn't offer his employees healthcare benefits at this time—said the legislation likely will have a direct impact on the number of part-time workers Network Tire employs.
“We run a lot of part-time employees, and so if we were responsible to provide healthcare to part-time employees, that could really deter us from hiring more, or we may even have to lay a couple of people off because it's just too much of an expense to incur,” he said.
Jim Enger, owner of Enger Auto Service & Tire Inc., a 19-store retail chain based in Euclid, Ohio, said his company may also consider layoffs depending on how the decision affects its expenses.
“There's going to be higher taxes, which in this economy we're unable to pass on to the consumer, so it's going to compress our margins even further in a tough economy,” he said. “We'll probably end up—instead of cutting everybody's pay—laying off a few guys or downsizing the workforce and not hiring, so it adds a negative stimulus.”
Rick Stewart, president of Action Tire Co. in Forest Park, La., said he's “not that pleased” with the legislation, adding that “it remains to be seen on the details.
“It's hard to decipher the ins and outs” of the legislation, he said, surmising that, “I don't think anyone has read the whole damn thing.”
“I'm not opposed to a change,” he noted, saying nonetheless he is concerned about the added expense for business people in general. His 10-outlet commercial/retail dealership offers health insurance that pays for half of an employee's premiums.
“I don't know any business person that's in favor of it,” he added.
Joe Flynn III, president of Mercer, Pa.-based Flynn's Tire & Automotive Service, said he feels the U.S. government simply will be inefficient at overseeing a national health care program.
“Anytime the government is involved with anything, they're never as efficient as private industry,” he said. “The more government involvement, the less efficient it will be.”
As an example, Mr. Flynn compared Ohio's state-run workers' compensation insurance with Pennsylvania's private insurance structure, which he said is less than half the cost per year. He added that, going forward, the health insurance industry could benefit from following the same business model as the automotive service industry.
“When you bring your car to get it worked on and you have a noise or a rattle or just bring it in for a general inspection, we come out to you and say here's what we found,” Mr. Flynn said. “Maybe it's perfect, maybe it needs new brakes, maybe it needs an alignment and an oil change…. We educate you on the condition of your car. You then make an educated decision on what you want to do.”
Mr. Flynn said he's “surprised it's taken this long for health insurance to be a problem when the consumer is as uninvolved as they have been,” and suggested consumers should have more control in choosing what tests and procedures they want done.
“Instead of doing the blood test, the MRI, the scan and everything, let's do the blood test first and see what happens,” he said. “…If the consumer's more involved, the doctor's liability goes down because the consumers are making the decision for themselves.”
While the effect the legislation will have on U.S. businesses remains to be seen, Mr. Flynn said one thing remains true: “The consumer will ultimately end up paying. They always do.”
Tire Business Staff Reporter Kathy McCarron contributed to this report.
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