Delta Air Lines Warns Obama About Increased Costs Under Obamacare

Reply Fri 23 Aug, 2013 12:26 pm
Delta Air Lines has issued an urgent warning about the impact of
ObamaCare, claiming the law's implementation will contribute to a roughly
$100 million increase in health care costs next year alone.

The astonishing figure was included in a letter from Delta executive
Robert Kight to officials in the Obama administration. The website
RedState.com was the first to obtain and publish the letter earlier this

A representative with Delta confirmed the authenticity of the letter to

"Like many large companies, Delta faces significantly increased
healthcare costs in 2014 and beyond," the company said in a statement on
Friday. "Delta will absorb the vast majority of those increased costs so
that we can continue providing a high value, high quality health plan.
Consistent with our culture, Delta will always keep the best interests of
our people in mind in connection with the healthcare and other benefits
we provide."

In the original letter, Kight disputes the notion that the law -- the
biggest parts of which take effect at the start of 2014 -- will mean
"business as usual" for big employers. A combination of factors, he
claimed, will "mean that the cost of providing health care to our
employees will increase by nearly $100,000,000 next year."

Part of that is normal medical inflation and the phase-out of an
assistance program tied to the health care law. But a large chunk of it,
the exec claimed, comes from various fees and costs associated with the
implementation of the health care law.

One of the costly items pertains to an annual fee of $63 per "covered
participant" next year. The company estimates this means a more than $10
million expense in 2014. The catch for Delta is that, because many of
their employees insure through Delta, the fee meant to help subsidize the
health care law's coverage amounts to a "direct subsidy" from the company
that provides "zero direct benefit to our participants," Kight said.

Another added cost comes from the requirement to cover children and young
adults on parents' plans until they're 26 years old. Kight reports that
the change led to 8,000 more people being added to their rolls, at an
annual cost of $14 million.

Further, the individual mandate -- or the requirement on individuals to
obtain health insurance -- is expected to drive more people into the
company plan and drive up their costs by another $14 million.

The letter, which was dated June 13, is among the latest warnings to
emerge about the looming costs to businesses from the health care law.

The administration and other supporters of the law argue that it will
expand coverage to millions, and use subsidies to help those in need
purchase insurance.

But in the process, employers claim they are being forced to change or
downsize policies, and reduce worker hours. The latter change is being
made because a provision in the law, eventually, will mandate insurance
coverage for employees working 30 or more hours -- some are trimming
their staff to avoid crossing that threshold.

Inside Higher Ed reported on Friday that Southern Illinois University was
the latest to move in that direction, reportedly by limiting the workload
of graduate assistants.

Other employers like UPS this week announced that they were planning to
end coverage of workers' spouses in part over concern about ObamaCare-
tied costs.

Reply Fri 23 Aug, 2013 05:26 pm
Here's some more news related to good-old Delta Airlines.

Apparently Americans trust them less than any other major brand!

The 10 Most Trusted Brands…and 10 least trusted
Posted on August 21, 2013 by Tim

A new survey from CoreBrand, a company that researches branding and its impact on business, found that Coca-Cola and Pepsi were tied as the most-respected corporate brands in the eyes of other business people. That means they combined high recognition with very favorable views. The top 10 were:

1. Coca-Cola
1. Pepsi
3. Hershey’s
4. Harley-Davidson
5. Bayer
6. Johnson & Johnson
7. Kellogg’s
8. Campbell’s Soup Company
9. Colgate-Palmolive
10. Estee Lauder

On the other end of the spectrum, the companies with the least brand respect, meaning they had much less favorable views, staring from the worst, were:

Delta Air Lines
Phillip Morris
H&R Block
Big Lots
Best Buy
Capital One
Rite Aid
Foot Locker

0 Replies
Reply Fri 23 Aug, 2013 08:28 pm
Delta carried 164 million passengers last year and the year before, so that means we are talking about a cost increase of $0.61 per passenger. Good thing they added the $25/bag luggage fee.
0 Replies
Reply Fri 23 Aug, 2013 09:46 pm
Two points:

(1) The source for Fox News's $100-million claim is a letter (PDF) to president Obama from Robert Kight, the CEO of Delta airlines. Kight's Obamacare-related numbers add up to $32 million a year. The other $68 million is general healthcare inflation, which will happen with or without Obamacare. So that's spin.

(2) Although $32 million is still a lot of money for most people, they don't make any noticeable difference to Delta's annual operating expenses, which run at about $35 billion, according to their annual report (big PDF document).
Reply Fri 23 Aug, 2013 10:05 pm
On a stylistic note, is anybody else noticing the Austin-Powers / Dr.Evil overtones here? "One. Hundred. Million. DOLLARS!!!"
0 Replies
Reply Fri 23 Aug, 2013 10:33 pm
Thomas wrote:

(2) Although $32 million is still a lot of money for most people

That's the worst part about fake news stories like this one -- the way they play on people's innumeracy. Americans generally don't understand that the budgets of households, corporations and governments operate at different orders of magnitude in terms of the money they take in and spend.

At least Dr. Evil understood that to be doing well, a corporation has to make beeelyuns, not millions.
0 Replies

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