Wednesday, August 8, 2012

The price of pizza

The LA Times reports that CEO John Schnatter of Papa John's Pizza is threatening to raise prices in order to absorb the additional costs of health care reform. He has already worked out the increase to approximately 11 to 14 cents per pizza. Schnatter is a big supporter of Mitt Romney, and an opponent of Obamacare, so I'm guessing this threat is meant to turn people against the law, and against the president.

But before people start getting outraged at the idea that they might have to pay a tiny bit more for pizza if companies like Papa John's are forced to provide health insurance for their employees, let's consider the alternative. Does it occur to people that we are already paying for the health care of Papa John's employees right now? Right now, if one of Papa John's pizza makers or delivery personnel gets sick or injured in an accident, they may have no alternative but the emergency room, which is compelled to accept them even if they can't afford to pay. Guess who pays for that. We all do, in the form of higher taxes or higher insurance premiums, or smaller paychecks (because if we are lucky enough to have employer-sponsored health insurance, our employers have to pay more to cover those costs.) Does that cost us more than the price increases threatened by fast food companies and other businesses that now fail to cover health insurance for their employees? I don't have the data on that, but I do know that countries that provide some form of universal coverage to all of their citizens generally spend less on health care as a percentage of the economy that we do in the U.S., and generally have better health outcomes than we do. So we already know that the inefficient, employer-based system that we already have is costing us a lot, and it is leaving a lot of people uncovered.

The point of the Affordable Care Act is that everybody who is not covered now is going to have to pay a little more, whether their employer now has to absorb those costs or they have to absorb them themselves. Which is going to mean that everyone else is going to pay less to support a health care system that right now must provide a lot of expensive treatment for free. Which is going to be offset to some extent by having to pay 11 cents more for your take-out pizza. After we compute all that, are we all going to be better off? Of course we are. And one of the main reasons we are going to be better off is that we won't have to worry any more about the millions of low wage workers at big companies like Papa John's who don't even have health insurance. We should be thrilled that John Schnatter no longer gets a free ride on the health care system that the rest of us are paying for. And he can whine about that all he wants, but even he had to admit that finally being compelled to provide a decent benefit for his employees, instead of requiring them to burden us with their use of public systems, is not going to be a big deal for him at all:

“We're not supportive of Obamacare like most businesses in our industry but our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare. Ergo, we have a high ticket average with extremely high frequency of order counts, millions of pizzas per year.”
What that translates to is that people like John Schnatter should shut up. Instead of complaining about the indignity of being required to do something good for his employees, he should just be happy that his company's employees no longer have to worry so much about medical expenses, and that he can just charge us directly for the costs of insuring those employees, instead of sneaking those costs on us unawares.

No comments:

Post a Comment