Benefits & Compensation News

Companies prepping for Obamacare — with layoffs, cutbacks

It’s official: President Obama’s signature healthcare reform law is here to stay — and many employers aren’t fans. In fact, many have announced layoffs to help cope with the cost of the law’s reforms.

FreedomWorks — an organization that claims to be “leading the fight for lower taxes, less government, and more freedom” and that’s been very clear that it’s not a fan of the law — recently compiled a well-sourced list of companies that have announced layoffs as a result of the costs they project to take on due to the law.

Many of the companies on the list are medical device manufacturers that will be forced to pay a 2.3% excise tax on all medical devices they sell, which the law requires.

The list includes:

  • Welch Allyn, a medical equipment manufacturer, announced it’ll lay off 275 employees (about 10% of its workforce) over the next three years. The layoffs were reported by The Post-Standard of Syracuse, NY.
  • Stryker, one of the biggest medical device manufacturers in the world, will eliminate 1,170 jobs (about 5% of its workforce). This story was reported by Fox News.
  • Dana Holding Corp., an auto part manufacturer, has hinted layoffs may be on the horizon as a result of the law. In a letter from company President Roger Wood to Dana employees, Wood explains “the Patient Protection and Affordable Care Act, also known as ‘Obamacare,’ is expected to cost Dana approximately $24 million over the next six years in additional U.S. health care expenses.” As a result, Wood says the company will have to take “aggressive” steps to manage costs, including reducing overhead costs. Wood later suggests that “colleagues” may be “affected.” The Toledo Blade obtained Woods’ letter to Dana employees.

From full-time to part-time workforces

As HR Benefits Alert previously reported, some companies are taking another approach: Rather than reducing the size of their workforces to deal with projected cost increases from the law, at least two companies — Darden Restaurants and Ann’s Linens Inc. — have announced they’ll test reducing their full-time workforces and increasing the number of part-timers they take on.

Reason: Under the law, employers aren’t required to offer health insurance to part-time workers (those working fewer than 30 hours per week).

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