OTR Interviews

Business owner faces moral dilemma over ObamaCare

ObamaCare has left one entrepreneur torn between keeping health care insurance for her employees and protecting her bottom line


This is a rush transcript from "On the Record," July 24, 2012. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Is your employer getting ready to drop your health care coverage? A new study finds there is almost a one in 10 chance that your employer is. According to a Deloitte Consulting survey, nine percent of employers will stop offering workers coverage as ObamaCare takes effect. Why? There is a simple answer. The cost of paying health benefits is expected to be higher than not paying them. Gail Johnson is the president and CEO of Rainbow Station, a group of early childhood education centers. She is debating the cost of health insurance for her workers now. Gail, thank you for joining us.

GAIL JOHNSON, CEO, RAINBOW STATION: Thank you so much for inviting me.

VAN SUSTEREN: How many employees do you have?

JOHNSON: We have about 175 employees in our corporate schools and in our franchise system, it's over 500.

VAN SUSTEREN: Do you provide health insurance for all 500?

JOHNSON: Just 175 in our corporate schools is what I myself am responsible for.

VAN SUSTEREN: Do you have any idea of the cost of that?

JOHNSON: Yes. Our health care coverage is about $500,000 to $550,000 a year.

VAN SUSTEREN: So you are considering, I take it, you have factored in what is going to happen when Obamacare kicks in. You figured out how it will affect you?

JOHNSON: I think this health care reform legislation has really already begun to impact us. In the last two years our health care premiums, the first two years ago went up 18 percent and last year 12 percent. It was one of those startling, oh, my goodness, this can't be happening. From the beginning I have tried to provide health insurance for my teachers so they could have access to health care with limited out-of- pocket expenses. But when these expenses came, I was forced to do something I had never had to do, which was provide health care deductibles. Our teachers -- our preschool teachers and education does not pay a lot, so this was a devastating move on my part.

Now, with the increasing uncertainty of what our health care premiums will be between now and 2014, I am wondering, what does that mean? When it gets to 2014 and I have to make a decision at that point, do I continue to pay high, increasingly high premiums and retain health care coverage for my employees so that my teachers have health care insurance within our company? Or do I say this is more than our bottom line can bear. We need to save this money to invest into our schools and into our programs. There are exchanges available to you. And so I can say to my teachers, go to the exchange and get health care. For that, I must pay a $2,000 penalty. But the bottom-line savings from a penalty versus paying what I am paying now could be up to $300,000 by then.

That's a business decision that I must make. Do I save that money and invest it in my schools or do I send -- do I keep the insurance so that perhaps I can be more competitive in the marketplace and attract better teachers for our schools? It's an incredibly difficult decision, what is the right thing to do. I am not the only one with this decision to make. There are many other midsized businesses like mine that have 50 or more employees that must make that decision.

VAN SUSTEREN: Gail, thank you. It's been helpful for us to try to understand what small business people are going through.

JOHNSON: Thank you.