Obamacare Will Cost Delta Airlines $100 Million Next Year

credit: atomicshark / Foter / CC BY-NC-SAcredit: atomicshark / Foter / CC BY-NC-SAYesterday, I noted ways that some employers are already limiting health benefits for workers because of Obamacare. Today, we have another example: Delta airlines says that the health law will cost the company $38 million directly, and nearly $100 million when all the additional costs are factored in.

In a letter signed by Robert Knight, Delta’s Senior Vice President for Government Affairs, the company says that the company will absorb some of those costs, but will also end up sharing some of them with employees. Ultimately, Knight writes, Obamacare “will result in increasing costs, for both companies and our employees, and will also reduce the benefits provided.”

The bulk of the letter, first posted by Erick Erickson at Redstate, details the specific provisions that Delta expects to add to the company’s costs. Those include:

  • A reinsurance fee of $63 per covered individual, which makes family coverage more expensive and which the company estimates will cost about $10 million next year.
  • Coverage for dependents up to age 26, which results in a “permanent increase in costs of about $14 million a year.”
  • The individual mandate, which Delta expects will result in some employees who currently turn down employer coverage deciding to take it rather than pay a penalty—which will cost the airline an additional $14 million.

But Delta can afford it, can’t they? The company’s profits were up 18 percent in 2012, when it netted about $1 billion on $36.7 billion in revenue. Compared to that, $100 million is just a drop in the bucket, right?

That’s one way to look at it. Here’s another: Delta is, at least for the moment, better positioned to handle these sorts of costs than many, perhaps even most companies. It’s a huge corporation with billions in revenue, and the $100 million cost represents a relatively small part of its net revenue.

And it’s still planning to reduce benefits for workers.

So consider how all the smaller companies that don’t have Delta’s cash cushion or reasonably strong annual margins are likely to react. And think about what might happen a few years down the road if Delta’s profits—which were losses just a few years ago—don’t hold up. The costs imposed by Obamacare won’t just be shrugged off, or eaten as part of the normal cost of doing business. They won't go unnoticed by execs, or unfelt by workers. They will have an impact, somehow, on employers and their employees, on the benefits they provide, and the coverage they receive.

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  • ||

    "Congress doesn't have a lot of core responsibilities."

    This guy is getting funnier and funnier as he gets angrier, isn't he?

  • Pro Libertate||

    I wish that would piss off Congress and that Congress would turn green and start yelling, "Congress SMASH!"

  • anon||

    Too bad that will remain just a wish for eternity.

  • ||

    Holy shit. I should stop insulting fuckwits by calling him one.

  • Doctor Whom||

    But he's a constitutional scholar and stuff. I'm sure he can recite Article I from memory.

  • UnCivilServant||

    Nice Alt-Text. Win.

  • Fist of Etiquette||

    I literally just watched that last night. It's literally in the list of top five funniest films of all times, past and future. LITERALLY.

  • PapayaSF||

    Surely you must be joking.

  • MJGreen||

    I just wanted to say: Good luck. We're all counting on you.

  • ||

    I just wanted to say: Good luck. We're all counting on you.

  • ||

    Do you like gladiator movies?

  • Dr. Frankenstein||

    Airplane II was on after the orginal on HBO last night as well. Not as good as the original. But, I didn't know whether to laugh or cry when they had the security guard have the scanner that could see the women's chests or when they let the Arab looking guys with the rocket launchers through while roughing up a grandma.

  • PapayaSF||

    Not nearly as good, but I liked the gag about the plane being refueled with coal.

  • ||

    I'm still fond of the Shatner/Star Trek gag with the door noise.

  • ||

    I don't think I've seen #2, but that gag about the security checkpoint sounds awesome (and true-to-life).

  • tarran||

    The scene where Mel Brooks is trying to sneak past the security guards to get on a plane out of SF in the movie High Anxiety is my favorite.

    "Remember, we're not sneaking by.
    We have to be loud and annoying.

    If you're loud and annoying,
    psychologically, people don't notice you.

    Come on. We can do it.
    Loud and annoying."
  • 0x90||

    Hi Jack!

  • Jordan||

    Does Delta still have employees harass you to sign up for shit every 100 feet in the Atlanta airport? If they'd stop that crap, I'd feel a little more sympathy.

  • ||

    Look, they had to pass it to see what was in it. Now we're seeing! Isn't it grand?

  • UnCivilServant||

    Another great leap forward, maybe with less starvation this time.

  • JW||

    It's the gift that keeps on giving. Like your mom's genital warts.

  • CE||

    Hey, it's called the "Affordable Care Act" for a reason -- Delta can afford another 100 million for their employees, instead of lining the pockets of their investors.

  • ||

    Also, Delta is only saved from being the worst by the fact that American Airlines is even worse than them. Fuck them. I hope they drown.

  • Pro Libertate||

    When I was ten, I assumed we'd be flying in hypersonic jets, with three-hour trips to Australia, the works. DISAPPOINTED.

  • BakedPenguin||

    Well, you could use your lawyer powers to score a surplus Concorde.

  • Pro Libertate||

    Not hypersonic, merely supersonic.

  • Tonio||

    I feel your pain. I want my moonbase.

    But, srsly, SST is pretty much dead for commercial air travel. I think we may see hypersonic or suborbital travel within a couple of decades. Maybe.

  • Pro Libertate||

    I think part of the point of the suborbital efforts is to develop hypersonic point-to-point transportation.

  • Tonio||

    Suborbital and hypersonic are different approaches to getting there faster.

    Suborbital is faster than hypersonic for really long-haul trips, ie London to Tokyo, but requires leaving the atmosphere which requires a whole other set of technologies (rocket engines instead of air-breathing jet engines, etc). Hypersonic is merely a super fast form of conventional flight and operates within-atmosphere. This would be faster for shortish flights, ie DC to NY, since you wouldn't have to climb out of the atmosphere and then re-enter.

  • Pro Libertate||

    Actually, the first time I heard about hypersonic travel was when the Reagan administration announced that NASA was working on it. That would've involved suborbital hops to lovely locations in Australia and the like.

  • ||

    Don't forget the magic that is the Delta Shuttle, not to mention the magical place that is LGA's Marine Air Terminal. Oh wait I guess things like that don't go to places like Ohio do they?

  • Marc F Cheney||

    Seconded. That flight from ORD to LGA is my favorite in the world of suck that is air travel.

  • ||

    Hey! Only some of that stuff about Ohio being a horrible shithole is true!

  • anon||

    Don't worry, I imagine they'll try to merge sometime in the near future.

  • albo||

    It's like the media and Obama supporters had a multi-year self-delusion party, and now the hangover strikes and everybody's wondering why they've got dry mouth and a massive headache.

  • Dweebston||

    Fortunately they can check themselves into one of the many conveniently-located clinics for their free detox and hug from a busty RN.

  • Tonio||

    Your ideas intrigue me...newsletter...etc.

  • anon||

    I think it's pretty great. People think I can see into the future or something, having predicted this shit 4 years ago.

  • PapayaSF||

    Not to mention their mysteriously sore asses.

  • CE||

    But didn't Obama inherit this health care mess from Bush? Oh wait, that doesn't work here...

  • robc||

    The additional costs reduce Delta's profit by 10%.

    Assuming that is consistent across the board, and assuming that the stock market generally operates as a multiple of earnings, then that takes 10% off the Dow.

  • Drake||

    It also drops corporate tax revenue off by at least 10%.

  • JW||

    What's the point of having an economy if you can't fly it into the ground?

  • Drake||

    Should we have become suspicious when they didn't show interest in landing?

  • Fist of Etiquette||

    No more stewardesses. Get your own damn peanuts.

  • Pro Libertate||

    See, that's where you're wrong. They'll keep the stewardesses, but they'll be paid on a per-act-of-service basis, directly by passengers. If you want their attention, you have to waive enough money to get it. They'll also be allowed to provide whoring services on the side to supplement their income.

  • Bardas Phocas||

    Just stick a fiver in their belt/g string and they'll give me a juice and smile at me with those dead eyes?

  • CE||

    Have you flown Delta lately?

  • Pro Libertate||

    Are you saying they've already made the transition?

    I actually haven't flown in nearly ten years. That's weird, because I used to fly a lot for work. But my current job requires almost no travel (so far), and I have four kids, so my wife and I tend to select vacation locations within minivan range.

  • Almanian!||

    The Peanut [Allergy] Gallery would like to than you, MURDERER.

  • Sevo||

    “will result in increasing costs, for both companies and our employees, and will also reduce the benefits provided.”

    I'm pretty sure the services will be worse, too, so it's three-for-three.

  • anon||

    I'm pretty sure the services will be worse, too, so it's three-for-three.

    Holy shit, it can get worse?

  • Sevo||

    Medical services, not what passes for service from Delta, or United for that matter.
    Mrs. Sevo and I were on a United flight once just two years ago that was on time. I remember it well.

  • Tonio||

    It can always get worse.

  • R C Dean||

    Actually, that is one of the candidates for elevation to an Iron Law.

  • Palin's Buttplug||

    Coverage for dependents up to age 26, which results in a “permanent increase in costs of about $14 million a year.”

    So Delta picks up the cost of health insurance for dependents.

    This could be spun as an untaxed pay hike for those employees.

  • Sevo||

    And shreek, when it comes to spinning, you've got the gold.

  • PapayaSF||

    Only for the ones with dependents aged 18-26. For everyone else it's a pay cut.

  • ||

    Wreckers!

  • Neoliberal Kochtopus||

    I was assured by the Bluetards and their enablers (*cough* StormyDragon *cough*) that this was all manufactured by greedy corporations.

    HUH WHO WOULD HAVE THOUGHT

  • Hyperion||

    Well, I mean, Delta could have just wasted that money on things like new flight technologies and other such non-sense to make flying better and safer for all of us.

    But who cares about non-important stuff like that, we need social justice, baby! That's the ticket!

  • John||

    It is only going to get worse. The question is do people demand their old insurance back and tell the uninsured and those with pre-existing conditions to go fuck themselves or do they decide that clearly the government paying for everything will be a better deal.

    I could see either one happening or I could more likely see our political class doing what they always do and telling the country to go fuck themselves because they can't undo Obama's biggest achievement.

    I don't really see the Dem politicians having the apatite for single payer. That would be really hard to do and the debate would do nothing but highlight all of the failures of Obamacare. More likely is that they just let this train wreck happen. They don't care if people are worse off as long as they get re-elected. The politically easier path will be to change the subject to some bullshit social issue and get people to vote on some other issue and do nothing. The Dems are the status quo party. So they will just die on this hill and hope they can change the subject.

  • JW||

    I don't really see the Dem politicians having the apatite for single payer.

    If only. They've amply demonstrated over the past few years that their appetite for power is as ravenous and yawning as Pelosi's asshole.

    Give it 2-3 years, if that, of the health insurance market imploding like this and they'll start banging that drum.

  • John||

    I don't think so. The problem is that to do that they will have to admit Obamacare was a failure. They will never do that. You can see this in their total refusal to even consider defunding or delaying Obamacare even thought doing so would probably help them in the midterms by delaying some of the bad effects.

    Their response is always "you can't expect us to defund or delay our greatest achievement". It is the wages of the personality cult of Obama. They cannot admit that his only significant legislative accomplishment is a total failure. And they have to do that to argue for single payer. They will never do it. They will just let things go to shit and pretend things are great or that it would have been so much worse without Obamacare. You watch.

  • PapayaSF||

    The other problem is that they'd have to argue that the government-controlled parts of health care just need to get bigger to work well, because the core problem lies in the remaining free market parts. That's a hard sell.

  • Bardas Phocas||

    They're going to ride this train right off the cliff.
    See The Wicked Witch "A brand new day is coming,”
    http://philadelphia.cbslocal.c.....-features/

  • JW||

    I hope you're right, but they'll always have these magic words to fall back on: It's the fault of those obstructionist Republicans.

    And the voting public tries to kick the football again. Like clockwork.

  • ||

    The most viable path is to effectively undo the ACA by legalizing high-deductible, catestrophic-only plans, rolling back MLRs, and putting in place multi-year waiting periods before pre-existing conditions are covered.

    Just "tweak' the law until the central provisions are rended effectively meaningless.

  • Duke||

    And you’d be wrong if you thought these real-life stories would cause Obama and his disciples to reconsider their healthcare regime as a very bad idea.

  • John||

    No. They don't give a shit. They will never admit they were wrong. They will just ignore the misery they have caused and try to change the subject.

  • BakedPenguin||

    And continue with the "Republicans are wreckers and kulaks" narrative.

  • Duke||

    And like Palin’s Buttlicker, they will try to spin it as a good thing: “See how these rich corporashuns are reinvesting their hordes of cash into the economy!” But these nitwits are too dumb to realize that healthcare spending is truly a zero sum game.

  • anon||

    I heard it was Bushcare.

  • Palin's Buttplug||

    The individual mandate, which Delta expects will result in some employees who currently turn down employer coverage deciding to take it rather than pay a penalty—which will cost the airline an additional $14 million.

    A dual gain for any Delta employee married to a UPS employee.

  • Duke||

    "As a dog returneth to his vomit, so a fool returneth to his folly."

  • Jordan||

    True classical liberals view constraining people's choices as a good thing. A double-plus gain, comrade!

  • Palin's Buttplug||

    No. I applaud the choices Delta and UPS made.

  • Duke||

    Obamacare is based off an 87-page white paper written by Liz Fowler – who in the two years before the bill was passed and while she was writing the “foundation” for Obamacare, was simultaneously working as Vice President of WellPoint - one of the largest health insurance companies in America.

    Meaning, health insurance companies stand to gain the most financially from a law which forces everyone to buy their product. Does this cognitive dissonance dissuade Butlicker? Nope. Because hard working people who bear the brunt of the American individual tax burden are paying these costs. And since they are against it, he must be for it. If Bush had come up with this, Buttlicker would assuredly be against it. And this is what all of us are up against each and every election.

  • MJGreen||

    But Delta can afford it, can’t they? The company’s profits were up 18 percent in 2012, when it netted about $1 billion on $36.7 billion in revenue. Compared to that, $100 million is just a drop in the bucket, right?

    Of course, contra the average HuffPo commentator, these profits aren't just $100 bills stacked in a warehouse somewhere. Much of it will be reinvested in capital. It's nice that Delta can survive for now, but it still greatly damages the business and the industry. TANSTAAFL.

  • John||

    And it is not like the airline industry isn't cyclical or anything. If Delta made a profit this year, they clearly will make one every year. No reason to have to worry about using that money to cover losses in bad years or anything.

    God they are profoundly stupid.

  • Hyperion||

    They can afford it.

    Here's some ideas to save that money.

    Only use one set of wheels on landing gear. Train pilots to skillfully lean the plane to one side when landing.

    Take out all the seats and make passengers stand the entire flight, that way you can get 3 times as many people on a flight.

    Fire all the trained mechanics and hire the newly legalized Mexicans to replace them. Give them all iPads, so that if they don't know how to do the job, they can google it.

    Fire all of the pilots and hire McDonalds employees to replace them. Pay them $15 an hour. Let them learn on the job.

  • Neoliberal Kochtopus||

    That landing gear one is pretty good.

  • Houkt Un Fanixs||

    And UPS Can save money by purchasing Bus Passes for the delivery guys... Win Freakin Win Bay-bee

  • Hyperion||

    I didn't see this in any topics here, and I don't even have a link. But.. did anyone else hear that Rand is working on a bill to impose term limits on congress? I think it was 2 6 year terms for Senate and the equivalent for the house.

    I know this can't pass, but I wish it would. If it did, the only question is what happens to congress critters when they leave. I propose that the ones will the skills to return to society and work in the private sector, do so, no pensions. The other ones, we shoot.

  • Neoliberal Kochtopus||

    No no, see, we invent these things call "Rehabilitation and Correctional Institutions" and send them there.

  • Hyperion||

    Too costly. Instead, tell them they better be working on engineering or computer science degrees, or something equally useful to society (at their own cost), unless they already have real world skills. When their term ends, for fairness sake, give them 6 months to find a job. If they fail, shoot them.

  • ||

    I've been wanting Congressional term limits for a long time - glad to see someone in Congress actually bring it up, even if it's doomed. But I say one term only - 8 years for senate, 4 for the House. No incumbents trying desperately to hold onto their seats.

  • Hyperion||

    Yes, my concern is that if the current levels of cronyism and corruption continue, 12 years in Congress will set you up for life. Also, no pensions needs to be a part of this.

  • ||

    It's too bad I'm not flying to VT for my vacation - there's always a decent chance of meeting good ol' Pat Leahy on the plane (has happened to me twice now). I could ask him about this :)

  • UnCivilServant||

    I want one term term limits with a maximum of four years in a term, and you are barred from holding any elective or appointed office at any level once you've served your one term in government. Time in appointed offices count against this term limit.

  • R C Dean||

    Try this for terms limits:

    You can be a Congresshole for as long as you want, but you lose your pension if you stay longer than 12 years.

    See how many of these noble, selfless public servants are willing to make an actual personal sacrifice in order to continue blessing us poor proles with their magnificence.

  • Paul.||

    You can be a Congresshole for as long as you want, but you lose your pension if you stay longer than 12 years.

    Huh, similar to the private sector... I like it.

  • sarcasmic||

    OT: Cop runs over little old lady and kills her. He's currently on a standard three day paid vacation. Here's the kicker. She survived Stalin's Russia, only to be killed by a careless cop.

    Will anything else happen?

    http://www.dailymail.co.uk/new.....d-car.html

  • John||

    And it is reported in a British paper of course. Our hard working skeptical journalists can never be bothered.

  • Art Vandelay||

    "Will anything else happen?"

    I don't know. Did she have a dog?

  • Palin's Buttplug||

    Aha, there is MORE to this story.

    “Make no mistake,” writes Kight. “The costs imposed on Delta and our employees are very real and they are escalating. [Obamacare’s costs], when combined with normal medical inflation and the end of the [Early Retiree Reinsurance] program mean that the cost of providing health care to our employees will increase by nearly $100,000,000 next year.”

    http://www.forbes.com/sites/th.....r=yahootix

    Turns out the ACA is only part of the $100 million equation.

  • Sevo||

    See? I knew you could do it without getting dizzy! You're the champ!

  • John||

    So everything is okay then in retard land.

  • Hyperion||

    Obama has been redeemed once again, by his bestest and most loyalist butt kissing apologist!

  • Palin's Buttplug||

    You don't appreciate my never ending quest for accuracy?

  • Hyperion||

    You mean for accurately kissing Obamas behind?

    I admit you are very good at it, but I don't admire it.

  • Adam330||

    You might try finding out what the Early Retiree Reinsurance program before gleefully proclaiming it not part of Obamacare.

  • OldMexican||

    Re: Palin's Buttwipe,

    Turns out the ACA is only part of the $100 million equation


    That fact is mentioned in the article above ("Delta airlines says that the health law will cost the company $38 million directly, and nearly $100 million when all the additional costs are factored in"), but you're right in pointing out that the headline is misleading.

    Still, $38 million is nothing to laugh about. That is serious money, Shriek.

  • Adam330||

    1) ACA was supposed to reverse normal medical inflation
    2) the Early Retiree Reinsurance program is part of the ACA

  • ||

    The company’s profits were up 18 percent in 2012, when it netted about $1 billion on $36.7 billion in revenue. Compared to that, $100 million is just a drop in the bucket, right?

    Uh, no. 10% of profits is a shit ton.

  • Palin's Buttplug||

    Yes, 10% would be if that were an accurate reflection of the cost of Obamacare to Delta. But we don't know what the actual amount is.

    Plus, Kight is a GOPer.

    http://query.nictusa.com/cgi-bin/qind/

    NTTIAWWT.

  • OldMexican||

    Re: Palin's Buttwipe,

    Plus, Kight is a GOPer


    And thus ipso fact he's lying.

    And that, ladies and gentlement, is what passes for "reasonable" discourse among Barry's fellators.

  • Fatty Bolger||

    “I’ve made this argument to my Republican friends privately, and, by the way, sometimes they say to me privately, ‘I agree with you, but I’m worried about a primary from, you know, somebody in the tea party back in my district’ or, ‘I’m worried about what Rush Limbaugh is going to say about me on radio.’”

    Just like his reporter friends privately tell him, right? Ah, Obama and his invisible friends, who always love him, and support him, and only want what's best for Obama (and therefore the country.)

  • John||

    His pet six foot rabbit told him that Republicans secretly love him.

  • ||

    OMG Obama is Donnie Darko! He just needs to kill himself to save the universe.

  • anon||

    There's no way I'd ever be that lucky. Better chances playing the lotto.

  • Neoliberal Kochtopus||

    I don't get what the problem is. Aren't politicians SUPPOSED to be afraid of their base? I mean, I know Obama has had it easy with his base giving over its culo to him every chance it gets, but you're supposed to be terrified of your base in real life.

  • John||

    That pretty much sums up the attitude of our political class both R and D. They view voters as imbeciles who do nothing but get in the way of them getting together and doing the right thing. What voters think is the right thing is irrelevant. How dare those boobs think they should have any say in how things are run.

    Look up on Youtube and watch David Brooks practically break out in to tears on one of the Sunday morning news shows about Bob Bennett being primaried out of the Senate to see what I mean. The fact that Bennett had been telling the people he was supposed to represent to go fuck themselves for over a decade didn't matter. It was a tragedy that they would turn him out of the Senate. Bennett was a reasonable guy who supported the things right thinking top men should support. And Brooks will never forgive those dumb hicks in Utah for having the nerve to disagree with him and expect him to represent their views.

  • Tonio||

    It depends on your perspective, PaleoConservative Sorosbourous.

    From the perspective which dominates here politicians should constantly live in fear of their constituents and try their damndest to not raise the wrath of the constituents.

    But actual politicians, once elected, see their constituents as a mass of sheep to be led and placated, but always, always held in contempt. Unfortunately, most constituencies are perfectly happy being treated that way.

  • toddb||

    H.L. Mencken approves of this comment.

  • Paul.||

    It costs to be a good citizen. Nothing's free.

  • Floridian||

    More proof for stormy dragon that there is a nation wide conspiracy to make ACA a scape goat for screwing employees!

  • ||

    We're dealing with people who think all profit is theft anyway, so they will never care what it costs any "corporation". Anything that costs corporations money and reduced their profits is by definition a good thing, in their eyes. Especially if it benefits their workers.

    The few people who recognize that the costs are going to show up in ticket prices and in hiring are not likely to be in the ACA camp anyway.

  • Drake||

    As I pointed out earlier - it will kill tax revenue.

    If Delta is making a 10% profit (paying 35% or so in federal tax) and you raise their expenses by 10% - the corporate tax paid by Delta drops by 100%.

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