Impact of Regulations on Employers

Part 2 of the 'Special Report' roundtable

This is a rush transcript from "Special Report," September 5, 2011. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Please don't challenge us with more rules and regul ations in Washington, D.C. that hinder us from doing that. We would prefer to start our day at a tractor cab or combine cab rather than filling out forms and permits to do what we'd like to do. Sometimes the best approach is just common sense. And we are already using that.

PRESIDENT BARACK O BAMA: Yeah, here is what I suggest, is the -- if you hear something's happening, but it hasn't happened, don't always believe what you hear.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: President Obama in Illinois talking with a farmer who had concerns about regulations. Politico actually did a follow-up to that and tried to get to the bottom of that specific regulation question and it took him a couple of days to not get an answer through many agencies and organizations.

Let's rejoin our panel. Brett, let's start with you. Regulations, obviously there are a lot of them in the construction world. But is the biggest for you the health care regulations?

BRETT HITT, HITT CONTRACTING: I think in terms of the bottom line, certainly the health care has made a major impact. And while I think everybody can appreciate, ya know, what we were trying to achieve by having a global system if you will that covered everybody, there just wasn't a focus on the bottom line and the actual cost.

And to speak, specifically towards that, I can tell you that we actually met the standard that has been created before 2008. We had ensured essentially every employee. At a cost of about $4 million, maybe plus or minus. Since then our cost as of maybe about three months ago was right at $6.2 million, a 33 percent increase in about a two-and-a- half year time frame. And I have to tell you, in terms of the bottom line with no revenue increase, you guys can imagine what has happened too in our income. It's absolutely, ya know, taking the bottom out of it because of the increase in our overhead.

BAIER: There are numerous reports looking at this from a company perspective. One of them was McKenzie quarterly quote and it says overall, 30 percent of employees will definitely or probably stop offering employer-sponsored insurance (ESI) in the years after 2014. The administration pushes back on these studies, but, Caity, what about in your business? You have 16 employees. How do you handle health care, and what do you think of the issue?

CAITY CALLISON, SECONDI: Well, I believe in social responsibility. I believe you take care of your employees, they will take care of you. So the people who are full-time with me are insured and I think it is cheap at the price I'm paying. They are all members of Kaiser Permanente, and they are delighted to have the care and I'm delighted that they use it. And I have no problem at all with my monthly fee. In fact, I think it's cheap at the price and I get to write it off. What could be better than that? I just -- I believe in it so much, they could go up and up as they do every year and I will go up and up with them.

BAIER: Dr. Shrader?

DR. RALPH SHRADER, BOOZ ALLEN HAMILTON: Well we are in a different situation. We're in a large business and I do agree with Caity's comment there, we believe the same thing about taking care of our employees. So we think we have a very good employee welfare program.

But I go back to the uncertainty again. As that is that as this health care program was evolving through Congress and when it came out, it was advertised that if you are happy with the care you have right now, you won't lose it. But as we examine it from a large company perspective, what we've come to find out is, there are actually improvements we would like to make in our plan. But an improvement is a change. And once you start to propose making a change in the plan, then the government gets back involved again in looking and deciding, ya know, whether or not you can do that.

And thus far, the methodology and procedure for actually improving these changes has not been made clear. So we are sitting here with uncertainty. And therefore we are locked in place. We actually can't make a lot of the changes we would like to make because we don't have a methodology yet approved for how we can go about making those changes. And again, it creates an uncertainty there. And again, you feel like you are playing with your hands tied and you are trying to do the right thing.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well think about how the government approached the health care reform. It writes a bill of 2,000 pages, and what is missing in it is one of the great causes of high cost of health care in America. Our health care is the best in the world but it's extremely expensive compared to the European. It's 20, 30, 40 percent higher in terms of how much of our economy is spent on it. And the reason is we have insane malpractice system. Everybody understands that.

There was a study in Massachusetts by the Massachusetts Medical Society, which found that one quarter, that's a quarter of all referrals, testing, hospitalizations, etc. are as a result of what's called defensive medicine. Doctors who do it only because they are worried about lawyers. And there is not a word of significance on tort reform in this entire reform of health care that the administration has passed. It's a glaring error and it accounts for the increase in cost almost every year.

BAIER: Brett, when you hear the administration saying that they will make efforts to cut back on red tape to make efforts to roll back on regulations, what do you hear as a business owner and well, as a voter?

HITT: You know, I don't think we see that actually come down the food chain, if you will. And certainly we relate to what the goes on, for instance, at OSHA, another one where I think, regulations have increased and certainly affected our business. Some of those things are, certainly again, they are meant well in the work place and a safe environment is something everyone wants to promote. But at the end of the day, we haven't seen those changes. In fact, if anything we have seen mandates that have driven our costs higher in the area of safety at all levels.

SHRADER: Well, we're seeing it more from the point of view of our clients. And that is our clients are coming to us and asking us to help interpret the impacts of these things. Trying to measure the economic, ya know, impacts of what's going to happen, what they're going to have to do to change. I mean one of our great strengths as a company is during times of change we are actually in demand because that's what we help our clients do. We help steer them through change. So as budgets are cut or as things are changed, people come to us and ask for our help.

But I have to tell you, that we seem to be spending a lot of our time and our client's money helping to steer through things that you really don't see the beneficial outcome yet. And I think that's the challenge there is -- so we are watching it sort of roll down to us. You actually said it doesn't hit you as it comes down [INAUDIBLE]. As we see the clients there, we see them struggling to try to cope with the impacts of this and indeed what could be major financial impacts to the longer term.

BAIER: Coming up, some final thoughts from our panel and some thoughts about possible solutions as we look forward, after this break.

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