Papa John’s Pizza and the business backlash

The real story: how some employers are still working to undermine Obamacare

The media have latched onto the story of John Schnatter. That’s the John of Papa John’s Pizza, a CEO with an Ebenezer Scrooge approach to his employees and customers. He is vowing to reduce employee hours and wages while jacking up the price of his pepperoni pies—all because of Obamacare. The press has presented the story as sort of funny but outrageous. Which it is. But that’s just the topping.

As the storyline went, What’s this guy trying to do to his low-wage employees when he lives in a 40,000 square-foot mansion with several swimming pools, a golf course, and a garage for 22 cars? As for his customers, Forbes crunched the numbers and discovered that although Schnatter claimed Obmacare would raise the price of each pie by 10 to 14 cents, the real increase was more like 3.4 to 4.6 cents.

Papa John’s remarks were tailor-made for Jon Stewart, who said, “Let’s stop pretending that suddenly with this election, bosses have been transformed into reluctant assholes. Obamacare is just the latest excuse to wriggle out of the social contract.” Dale Hansen, a blogger for The Detroit News, weighed in on l’affaire Papa with a question, noting that “companies are always trying to maximize profit so consumers are forced to pay for things we may or may not like with every product we purchase.” Why is this big news, Hansen asked?

Schnatter’s comments last week should have hardly startled anyone. In August he made it clear in a Los Angeles Times piece that if Obamacare rolled out in 2014, the pizza chain would be forced to choose between its customers and its investors, and it would side with investors. In a conference call, Schnatter said costs the law imposed on the pizza business would be passed on to consumers “in order to protect our shareholders’ best interest.”

The Times dipped into the matter, but didn’t go in far enough. The Times simply noted:

The National Restaurant Assn. has criticized the healthcare legislation for having a chilling effect on expansion and hiring in the industry, which tends to be labor-intensive and burdened with thin margins.

Other fast food and family restaurants, like Olive Garden, Red Lobster, Dairy Queen, and some Denny’s franchises are talking about cutting employees’ hours and using more part-time workers, while Burger King and White Castle have predicted surging costs—all blaming Obamacare.

What additional ingredients could the media be adding to this story? Context, for starters. How about more on the continuing organized effort by the business community to beat back Obamacare, which it has been trying to do from the get-go. The National Federation of Independent Business (NFIB) was one of the plaintiffs in the lawsuit challenging the Affordable Care Act, which failed in the Supreme Court last June.

Of course, many businessmen including Schnatter, would have preferred Mitt Romney in the White House, partly because the candidate promised to move to repeal Obamacare on “day one.” (Schnatter hosted a fundraiser for Romney, in fact, at his mansion in Anchorage, KY, and the candidate was knocked out by the property: “Who would’ve imagined pizza could build this?” Romney says on a videotape of the fundraiser. “This is really something. Don’t you love this country?”)

And the effort is ongoing. After the Supreme Court handed down its decision, the National Restaurant Association issued a statement noting its concerns. “This unworkable law cannot stand as it is,” said the association’s president, Dawn Sweeney. The problem is, as she put it:

Employers with 50 or more full-time equivalent employees must offer ‘affordable’ health insurance of minimum value to full-time employees and their dependents or pay penalties. The cost of such coverage or the penalties could threaten the very slim profit margin on which most restaurants operate.

The restaurant association has signed on with Stop the HIT, a coalition of more than 30 organizations, including some heavy hitters like the NFIB and the US Chamber of Commerce, formed to repeal a tax on insurance companies called for by the ACA. The restaurant owners and other businesses fear that the tax—expected to raise some $87 billion over ten years to pay for the subsidies for the uninsured—will be passed on to them in the form of higher premiums for their workers. A hidden tax, they call it. So far, they’ve got more than 200 members of Congress to co-sponsor a bill that would repeal the tax. The press hs overlooked the ramifications of this.

As CJR reported last May, the group is also active in local communities, where it uses the local press to help spread its message to businesses in small towns across the country. That effort continues.

If the tax is repealed it could mean diminished subsidies for the uninsured—one of the pillars of the ACA. For instance, consider a family of four. Obamacare currently will help them—at least to some extent—if their income is 400 percent or less of the poverty level, or about $92,000. If this tax is repealed, help might instead be limited to 300 percent of the poverty level, or about $69,000 for a family of four.

Since so many restaurant workers are without health insurance coverage, this Papa John’s flap touches on their well-being in many ways. Schnatter talks about cuts in wages and hours. But repealing the tax and potentially threatening Obamacare subsides meant to help such employees get health insurance—that matters too.

Related reading:

How an anti-tax HIT squad employs the press

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman. Tags: , , ,