August 14 2012

Obamacare and Pizza

Julie Gunlock

Writing about Papa John’s President John Schnatter’s comments about how Obamacare will hike the price of pizza by up to 14 cents per pie, persistently condescending writer Matt Yglesias sniffs:

“…doesn't it seem like a rather small price to pay? Papa John's website is currently offering to deliver me a large pepperoni pizza for $14.08 and Schnatter is warning me that the problem with Obamacare is ... a one-time price increase of less than 1 percent! That seems eminently reasonable. What's more, it's well within the range of the kind of price swings Papa John's is going to have to expect just based on the vagaries of the weather, which impacts the price of ingredients, and the ups and downs of the oil market.”

I agree with Mr. Yglesias that the Schnatter's estimated pizza price hike probably won’t prevent a person from ordering from Papa John's but since Yglesias admits that Pappa John’s will have to hike their prices due to weather and oil market fluctuations as well, why is he surprised that a corporation would object to man-made price hikes?

But more importantly, Yglesias assumes this “small price” is the only cost a restaurant will face because of Obamacare.  As Heritage Foundation writer Amy Payne lays out today, this simply isn’t true:

  • At least 60 percent of firms are estimating Obamacare will raise their health care costs, according to a new study released Wednesday by Mercer, a human resources consulting firm. One-third of those expect a cost increase of 5 percent or more.
  • A full third of the businesses can’t even estimate Obamacare’s impact yet—because so many of the law’s rules have yet to be written by the Department of Health and Human Services (HHS). And a number of its main provisions don’t go into effect until 2014.
  • Obamacare requires all businesses with 50 or more full-time employees to provide health coverage for their workers or pay a $2,000 penalty for each employee after the first 30 workers. Some businesses have expressed that they are likely to avoid hiring so they don’t go over the 50-worker threshold for mandated coverage; also, they are likely to cut workers’ hours so that they don’t qualify as full-time to avoid the penalty.
  • This is especially tough for restaurants, which provide lots of jobs for low-income workers. The Wall Street Journal reported that “McDonald’s Corp. Chief Financial Officer Peter Bensen said in an earnings call two weeks ago that each restaurant will incur between $10,000 and $30,000 in added annual costs because of provisions in the law.”
  • The restaurant group that owns Hardee’s and Carl’s Jr., CKE Restaurants, will face the choice between expansion—creating new jobs—and tightening its belt to deal with Obamacare, its CEO Andy Puzder lamented.

Add it all up, Mr. Yglesias.  The price ain't so small.

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