Friday, November 15, 2013

Inside the Fox News spin machine: I fact-checked Megyn Kelly on Obamacare

Inside the Fox News spin machine: I fact-checked Megyn Kelly on Obamacare

When a guest said Obamacare made him sell his business, I called him for his full story. It was more complicated

Inside the Fox News spin machine: I fact-checked Megyn Kelly on Obamacare
Megyn Kelly (Credit: AP/Richard Drew)
Bill Lawrence of Texas recently posted on his Facebook page that he sold his business because of Obamacare.
Naturally, Mr. Lawrence was then invited on Fox News to be interviewed about his ordeal. He was on the Megyn Kelly show a week ago Friday.
Most of Kelly’s questions were fat softballs or in some cases just statements (“Employers like you might just have to say, ‘I’m gettin’ rid of my company!’”; “Your thoughts on having your livelihood directly affected based on what politicians in Washington felt was best for you?”).
I looked up Bill and decided to give him a buzz to learn more. He lives outside of Houston. We spoke for 45 minutes. He’s a guy who’s sort of hard not to like — funny, very sharp and obviously a very good businessman who built a large business from scratch.
Bill recently sold his company Bubbles Car Wash, with 13 locations and 290 employees, to a private equity fund for what he admitted was a tremendous price. “I’ve been very successful,” he acknowledged. (He boasted in a 2011 Houston Business Journal article that he owns two Mercedes and a Bentley convertible.)
With 290 employees, his business would be subject to the Affordable Care Act’s employer mandate that kicks in in 2015 (assuming it isn’t delayed, as it has been once already), which will force companies to offer insurance to workers or else pay a penalty. Bill says it would have run him in the neighborhood of $400,000 annually.
My first question to him was: Would he show me some of his business’s financial records? Maybe an annual report, preferably something audited, so I could analyze his claim about the catastrophic effect Obamacare would have had on his business? He would not.
Did Megyn Kelly request such verification? No, he said, she did not.
I then pressed Bill on whether there were any other reasons he was selling his business. He admitted to me that there were plenty of others (“myriad reasons,” in his words). What were some of them?  “You ever run a business?” he asked with a chuckle. And then he began ticking off a bunch of problems in his life that he said he’d now be glad to be rid of.  The headache of managing workers. Taxes, fees and permits of every shape and size and color (dumpster permits, gate permits, this permit, that permit). He complained to me that he has to pay $300 for an “auto dealer’s” permit just to sell air fresheners at the checkout counter of his car wash centers.
From the sound of it, Gov. Rick Perry is more to blame for Bill’s choice to retire than Obama. Perhaps Texas is not the pro-business eden that Perry portrays it to be.
Nonetheless, Bill insisted that the Affordable Care Act was the “primary” reason he chose to sell out and retire after 22 years. He told me he spent a year attending seminars and seeking advice from lawyers and insurance experts on the employer mandate, and it was universally made clear to him that the new federal law would make it too costly to stay in business.
There’s no questions that Bubbles Car Wash will have to absorb a new cost under the employer mandate. The question is how great it will be, and whether it will impact the business enough to have required Bill to unload it. Although Bill wouldn’t show me any hard financial data, I asked him if he could give me a brief sketch of his company’s revenue. He thought for a while, and then said he’d estimate that the company had around $13 million a year in revenues and about $900,000 in earnings — earnings, meaning post-salary (he wouldn’t tell me what his annual salary had been as an owner of the business).
Bill also told me most of his wage earners do not want health insurance. He’s offered a mini-med program in the past, a very cheap and bare-bones plan that employees could purchase, and they usually decline it. If that’s the case, Bill’s burden will be much smaller than what he told Megyn Kelly. Under the Affordable Care Act, Bill must simply offer his employees a chance to share in the cost of an insurance plan. The worker’s share can legally be as high as 9.5 percent of the worker’s household income. Once Bill has made this offer to an employee, if the employee declines the coverage then Bill is off the hook and doesn’t have to pay a penalty.
And sadly, Bill might be correct that his wage earners (who earn $8.50 to $10 an hour) can’t afford to spend as high as 9.5 percent of their salaries sharing the cost of an insurance plan.
I sent Bill an article from a recent Forbes magazine that shows how businesses of his size, and specifically Texas businesses, will have ample opportunity to keep Obamacare costs very low by strategically offering insurance plans that they know their employees will reject, forcing them onto the individual exchange in some cases. He did not respond.
Incidentally, Bill also told me that the private equity company that bought him out had approached him as early as “three or four years ago,” so he was at least speaking to the buyers before Obamacare ever existed. A spokesperson for the new owner refused to talk to me for this article. Suffice it to say, however, that a private equity firm sees enormous potential in Bubbles Car Wash with or without Obamacare.
In the final analysis, Bill is a strong conservative who believes government has no business saddling him with new costs. He said it would be nice if every citizen could be insured, but “even if the cost were only 10 percent of what I’ve estimated,” he said to me, “why should the federal government make it my responsibility to pay for it?”  (We decided to agree that there is no right or wrong answer to that question, only opinions.)
And as for Megyn Kelly, she asked very few probative questions before or during the interview, preferring instead to just take Bill’s claim about Obamacare at face value. But clearly there was another side of the story.
Special thanks to Bill Bertovich, one of my readers, who tipped me off to the above segment.
Eric Stern lives in Helena, Montana. He was senior counsel to Brian Schweitzer, former Governor. Follow him on Twitter at @_ericstern.

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