Tags: premium | health | insurance | pay

Obamacare Consumer Pain Will Derail Some Retailers' Profits

Wednesday, 25 Sep 2013 07:51 AM

By Michael Carr

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Somehow, the Obama administration finds good news in the fact that poorer households will be suffering large drops in discretionary income next year.

Recently, HHS Secretary Kathleen Sebelius noted, "With more than half of all uninsured Americans able to get coverage at $100 or less, the healthcare law is delivering the quality, affordable coverage people are looking for."

While this is a small cost for the Secretary, who makes $196,700 a year, $100 a month might be significant for the average American family.

The uninsured are often in low-paying jobs and might not be happy spending $1,200 a year on health insurance they will not be able to afford to use.

For an uninsured person who makes $50,000 a year, a $100 a month premium is the same as a 2.4 percent pay cut. For those with lower incomes, the amount of the pay cut is even higher. For that, they get insurance, but copayments and deductibles are likely to prevent them from using the insurance.

Outside of Washington, budgets are limited and after paying for the insurance, or paying a penalty for not being insured, these families will have less money to meet other expenses. This is likely to lead to a decrease in spending at retailers that serve the middle class and families that live paycheck to paycheck.

Wal-Mart, Big Lots and Family Dollar stores are likely to see a drop in sales. Potential winners could be Target and Costco, stores that serve the upper middle class workers at insurance companies that will benefit from increased revenue.

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