Obamacare isn’t such a bad deal for Papa John’s after all
To borrow a metaphor, if the numerous scary myths about the Affordable Care Act were candies and nuts, every day would be Christmas.
One such myth is that the ACA is a terrible deal for outfits like Papa John’s Pizza.
Ezra Klein rebuts that notion HERE:
In 1974, President Richard Nixon’s health-care plan proposed forcing employers to pay 75 percent of the cost of basic health insurance for their employees, though there would be some assistance for smaller businesses. In 1994, President Bill Clinton proposed forcing employers to pay 80 percent of the cost of basic heath insurance for their employees, though a somewhat confusing series of caps meant that smaller businesses would end up paying much less.
In other words, both Democratic and Republican presidents used to think the proper role for business in the American health-care system was to pay most of the cost of their employee’s health-care insurance.
Under the Affordable Care Act, the principle is different, and much less onerous: Employers don’t need to offer health care, and they don’t need to pay for most of the cost of their employee’s health care, but if their employees are taking advantage of public subsidies, then the employer should have to pay a penalty equal to about 1/8th the cost of the average employer-provided health insurance plan.
Some employers are still unhappy, and understandably so. The Affordable Care Act will impose new costs on them. Papa John’s, which doesn’t provide most of its employees with health insurance, is warning that it might have to raise prices on its pizza by 11 to 14 cents per pie to offset the penalties.
That might seem laughable, but it’s a legitimate reason for Papa John’s to dislike the bill. Businesses try to cut costs. One way they do that is by skimping on employee pay and benefits. The Affordable Care Act, at least in the short-term, will raise costs on businesses that have pursued that particular cost-cutting strategy.
As Slate’s Matt Yglesias has noted, that makes the Affordable Care Act an intervention on a particularly worrying change in the economy. In recent years, corporate profits, measured as a percentage of the U.S. economy have been hitting record highs, even as the share of those profits that go to workers have hit record lows.
The health-reform law won’t reverse that trend, but for the businesses that are doing the most to drive it — the ones that have cut costs and boosted profits by paying their workers very little and refusing to offer them decent health insurance — the Affordable Care Act will force them to contribute a bit more toward their workers’ health care or raise their prices. And if they choose the latter route, then fine: It levels the playing field between them and their competitors who haven’t taken a low-road approach to paying their workers. That gives pizza companies that do pay their employees well a slightly better position in the marketplace than they have today.
That won’t make Papa John’s feel better, and it shouldn’t. The Affordable Care Act isn’t helpful to their business strategy. Rather, it’s helpful to the business strategies of companies that have sought success by paying their workers good wages, giving them reasonable benefits, and delivering a higher quality product. Which should make us feel better.
Still, Papa John’s can comfort itself with the knowledge that it is not being asked to do nearly as much as Presidents Clinton or Nixon wanted it to do. It doesn’t have to give its employees health care or pay them well. It just has to pay a small fraction of the cost that the public will pay to insure its employees. It’s not as good of a deal as the status quo, but it’s a better deal than it could have expected, or than it probably deserved.
UPDATE: Meanwhile, the Denny’s restaurant chain is trying to deal with its own PUBLIC RELATIONS PROBLEM regarding the Obamacare.