Baldor: Health care law costs result in lost jobs

Part of the GOP effort began Tuesday (Jan. 18) to amend or repeal the new health care law included details on extra costs the law will place on Fort Smith-based Baldor Electric Co.

U.S. Rep. Steve Womack, R-Rogers and one of many GOP Congressman to speak on the House floor Tuesday, said Baldor is an example of a company planning to reduce workforce to absorb higher healthcare costs related to implementation of the new law. Womack said Baldor’s extra costs are estimated at $2.9 million in the first year.

“How does a company like Baldor absorb that cost? By further automating its processes and thru attrition, allowing 50 jobs to disappear,” Womack said during his floor speech. “Eliminating 50 jobs in the first year for a company like Baldor — not to mention hundreds, if not thousands of companies across America similarly situated — is not my idea of restoring economic prosperity for America.”

Approved in March 2010, the Patient Protection and Affordable Care Act is designed to increase access to health insurance, reform the health insurance market to provide additional consumer protections, and improve the health care delivery system to reduce costs and produce better outcomes. The Congressional Budget Office (CBO) estimates that the coverage provisions in the bill will cost $848 billion over 10 years (fiscal years 2010-2019). However, the major provisions in the bill would not take effect until Jan. 1, 2014, meaning the bill uses 10 years of revenue to pay for six years of coverage. Also, the uninsured with a pre-existing condition can get insurance and will allow retirees maintain coverage.

The new law received a small setback Dec. 13 when U.S. District Court Judge Henry Hudson ruled that a portion of the new health care law is unconstitutional in that it “exceeds” the power of Congress to require Americans to purchase a product.

Tracy Long, Baldor vice president-investor relations, confirmed Womack’s statement, and added that automation will help the company absorb higher health care costs.

“If we don’t replace the next 50 employees who leave, then we will be able to offset the additional health care costs we will incur this year as a result of the new health care bill,” Long noted. “We are adding automation to our facilities, so when people retire or move away, we don’t have to replace those positions, and we can protect the remaining employees from the added cost for healthcare that results from the healthcare bill.”

Continuing, Long wrote: “This added healthcare expense is actually a penalty on our company and employees because we choose to manufacture our products in the US and not in other countries where they don’t have these additional costs. It makes us less competitive globally because we have to absorb the costs and not pass them on to customers.”

Baldor is not the only large area employer to see higher costs as a result of the new law. David Humphrey, vice president-investor relations and corporate communications for Fort Smith-based Arkansas Best Corp., said the transportation holding company will see big jumps from having to cover dependents up to the age of 26 and the removal of lifetime maximums on individual care.

“In both cases, our increased costs are hard to predict as they will result from the health care expenses incurred by the new dependents covered under our plan and those now covered who had previously exceeded the lifetime maximum,” Humphrey explained. “In successive years, these new costs, and additional new costs associated with the implementation of other provisions from the bill, will continue to add to our total health costs. This is all in addition to the normal, yearly health care cost inflation that occurs regardless of a law change.”

Also on Tuesday, six more states — Iowa, Kansas, Maine, Ohio, Wisconsin, Wyoming — joined a lawsuit in Florida against the health care law. The lawsuit now has 26 states signed on to oppose the law.

“It (coalition of 26 states) sends a strong message that more than half of the states consider the health care law unconstitutional and are willing to fight it in court,” Florida Attorney General Pam Bondi said in a statement.

The other states that have joined Florida’s suit are: Alabama, Alaska, Arizona, Colorado, Georgia, Indiana, Idaho, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington.