Papa John's Backtracks From Claim That Pizza Prices Will Increase Because of Obamacare


Is Obamacare having negative effects on employment?

Dr. Nick Turkal, CEO of Wisconsin-based non-profit Aurora Health Care, announced earlier this January that he would have to cut jobs thanks to a $13 million or more decline in reimbursements caused by the weak economy, the fiscal cliff, and cost reductions mandated by the Affordable Care Act. The Huffington Post began their write-up with the salacious observation, "it looks like Obamacare is having some negative effects on the industry it was intended to help."

How bad is it really, though? Any cuts made would be minor in comparison to Aurora's 30,000 employees, and it looks like the bigger threat to the company's future comes from proposed cuts by deficit hawks. Aurora could face other setbacks, such as a 27% reduction in Medicare payments that could cost the company $78 million a year or automatic budget cuts under sequestration that would result in $23 million in cuts.

As Forbes notes, insurance companies will likely do very well under the Affordable Care Act as mandatory health insurance requirements drive up their customer base, while hospitals could see an increase in payments and customers thanks to the increased pool of insured. Meanwhile, the heath care industry soared 7.3% in 2012, making it the most profitable sector in the Standard and Poors' 500 index, trailing only behind energy.

Some business leaders in other industries have railed against the new regulations, in particular the requirement to provide health care insurance options for all full-time employees.

Most visibly, Papa John's CEO John Schnatter repeatedly claimed that Obamacare would increase the price of a pizza by eleven to fourteen cents (even if you accept his numbers, hardly a dramatic setback).

CNN did some fact checking, and found that the exact costs of Obamacare for the chain were incalculable thanks to the pizza franchise's refusal to provide pertinent data (such as the number of pizzas they sell, how many full-time employees they have, what their current health care plan is, etc.). However, they rated Schnatter's claims as "false" because Obamacare does not require companies to provide health care plans to part-time employees, as well as exempts many small businesses (such as the local franchises which compose Papa John’s retail locations) from the health care requirements.

After being debunked, Papa John's is backing off from its claims that Obamacare would raise prices and potentially cost jobs, now saying Schnatter was quoted incorrectly. Due to the business’ strength, the company now says, Papa John's could absorb the added costs easily.

The Stabley Times reports that a PR firm working for Papa John's has been attempting to suppress coverage of the story, asking them to remove their coverage of Schnatter's remarks because they were supposedly "taken out of context." The firm told the Stabley Times that it had contacted many writers and publications before them and wrote that in "virtually all of these cases, we've been dealing with responsible journalists who have removed the content."

"…while Papa John's isn't going to the extreme of making legal threats against journalists who cover the Obamacare incident, the admitted ongoing efforts of its PR firm to convince journalists to remove their coverage of it is something which we believe speaks for itself," the Stabley Times said. "In their exact words, they asked that we respond by 'preferably removing the post.' Feel free to draw your own conclusions."

While health care exchanges are still slated to be set up in 2013, it seems like companies are slowly admitting that the Affordable Care Act will not devastate their bottom line – or cost many jobs. In fact, it looks like the health care sector will do particularly well, while other industries will see little impact on cost.