• Health care reform and the price of pizza

    A lot of you wrote me yesterday about the CEO of Papa John’s announcing that the ACA would increase the price of pizza. I respond today over at CNN.

    Go read, RT, like, share, etc. You know the drill.

    @aaronecarroll

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    • My only objection is that the CNN clip art team used a very not Papa John’s pizza for the photo. If only they looked that good. Still the garlic butter sauce is pretty awesome.

    • CNN article is the absolute best article I have read yet explaining the Affordable care act.

      Especially these 2 paragraphs:

      “””

      In 2004, for instance, more than half of Wal-Mart employees (PDF) did not get health care coverage through their jobs. More than a quarter of children of Wal-Mart employees therefore got their insurance through Medicaid or SCHIP. That means Wal-Mart didn’t pay for their health insurance; taxpayers did. Moreover, every time an uninsured employee had to go to an emergency department and receive uncompensated care, who paid for that? The rest of us.

      Things got so bad that Maryland passed a law in 2006 that pretty much targeted Wal-Mart to demand that it spend 8% of payroll on health benefits or pay the difference to Medicaid. Yes, Wal-Mart might have had to raise its prices a bit to cover that. But doesn’t it make more sense for those who choose to shop at Wal-Mart to foot the bill, than for everyone, including those who don’t, to have to pay for its employees’ health care?

      “””

      And that is what all this crap is about. Not me, I have a good job with insurance. Its about the working poor that are screwed. We are paying for their suffering anyway.

    • I’m becoming more afraid of this “Obama”-care. It is moving us farther and farther away from the socialized medicine we enjoy today, where we all get free healthcare at our friendly neighborhood ER, towards a capitalistic system where we all are going to have to foot the bill for our own health care coverage. Next he’ll be telling us we have to choose between a variety of companies who are competing against each other to provide the best service at reasonable rates.

      What’s this world coming to?

      By the way, eleven cents of every pizza goes to pay for employee uniforms. Is it fair that we the consumer should have to pay that too?

      Great article! Jack

    • Thank you for your response to Papa John.

      I only wish that you had followed your logic to the

      next step.

      The logical conclusion is that we taxpayers are paying for the low paid employee

      to enhance the profit for the employer.

      That is socialism.

      Instead, we need to require a

      minimum wage that pays the full cost of keeping that employee alive. If the employer doesn’t

      pay, the tax payer does. We all pay higher taxes due to AFDC, EITC, medicaid, sec 8, etc

      because employers are profitting off the work of undepaid workers.

      This is the taxpayer

      subsidizing labor costs for employers who make millions grom taxpayer largesse. This is a

      transfer of wealth from the middle class who pay taxes to the business owner who profits

      from subsidized labor.

      If employers were required to pay the full costs of their workers,

      almost all social programs could be eliminated. Taxes could be greatly reduced, and offset

      the higher cost of goods and services we are now forced to pay. Now we don’t have a choice

      but to support apa Johns emplyees in the form of higher taxes. If they were reqired to pay

      the full cost of their labor, we would at least have the choice not to buy their product if

      we thought it was too high. Transferring those costs to taxpayers eliminates the choice.

      This is not true free market- this is taxpayer subsiding the business owner. I never eat

      Papa Johns pizza, but now have to pay when his employers are required to use emergency

      services or any other gov program for the poor.

      I hope you can take the next step, and raise

      the awareness of this ‘reverse’ socialism’ that you obviously understand.

      I don’t have a

      voice, you do.Perhaps you can further raise awareness of this issue, or spread the message

      to those who also have a voice.

      A lower than living wage hurts all of us, and is a transfer

      from the taxpayer to the employer.

      Thank you.

      • Do you think that if Wal-Mart paid more that they would be better employees? And if every business pays more they will all get better employees and since at any instant in time there is a fixed amount of money that would leave higher unempoyment? If not then why not raise the minimum wage to twenty or thirty dollars an hour?

        • So to make so many posts but..

          The question is why is the demand for unskilled labor so low that Wal-Mart can get employees as cheap as they can. BTW Wal-mart’s Profit Margin (ttm): 3.52%.

          • Just one more post.
            The reason that I fight this is because I am an advocate of a wage subsidy. A wage subsidy keeps people working increasing the overall productivity of the society but some would scream that it is a subsidy to employers.

    • “More than 30 million Americans will get insurance under the Affordable Care Act. Tens of millions more will be protected from underinsurance, annual and lifetime limits, and unfair price increases. If the downside of this is that my pizza costs 20 cents more, that seems a pretty small price to pay.”

      If only you had let the CBO know that the ACA’s cost of insuring 30 million Americans boiled down to a mere 20 cents per pizza! All this time, we could’ve been rolling around in savings…

    • They could take this out of profits or reduce the salaries of their executives, but they will probably do what every business does: They’ll pass it on to the consumer.

      Figuring the incidence of a tax can be very tricky. The ACA cost is per employee and is like a minim wage hike and so what happens? Here is on possible process:

      1. First the cost goes up per employee goes up a bit and so profits shrink slightly and losses increase slightly.
      2. There are always restaurants that are going bankrupt and on the verge of going bankrupt. So they go bankrupt just slightly faster.
      3. Their employees will be out of work for a slightly longer time than otherwise.
      4. Now there are fewer pizza restaurants and this allows the remaining pizza places to raise their prices.
      5. People buy slightly less pizza and instead make more meals at home. (note this a trade off people are working more in untaxed in the home production and less in the taxed and regulated economy).
      5. The surviving pizza restaurants higher more employees but their are slightly less pizza restaurant employees over all.
      6. Because the employees of pizza restaurants are relatively more compensated they are better employees and service improves.

      Of course it could vary but since this is very similar to a minimum wage increase I think that the losers will mostly be people who end up unemployed for longer a periods of time and some business owner who might have edged by but now are bankrupt.

      To some very small degree I think that we all pay all taxes. We should not tax more money than is needed to run the government (nor less than is need for important public goods for that matter).

      • One other point is that there is at an instant in time a fixed amount of money and so if more goes to pizza less goes to something else.

      • My point was that one way or another, we all have to pay the cost. Those screaming that the ACA is socialism generally don’t realize that low wages necessitate some subsidies for the poor, which is really a form of susidizing business.

        Either we pay higher taxes, like we have been, or we require that employers pay the cost of their own labor. To claim that the ACA will somehow reduce the amount of capital available to employ people due to reduced demand due to higher cost ignores the fact that we are already paying the cost of healthcare for those who are now uninsured.

        As stated, the amount of capital in the system is relatively constant, and if long term we end up with less taxpayer support for healthcare, that will give each taxpayer more cash to make up for the higher costs caused by the employer requirement to provide health care coverage.

        Real world example: Papa John now pays no health premium, Taxpayers and the already insured pick up the cost through higher premiums and taxes for medicaid for the poor, etc.

        Under ACA, Papa John pays a little more to provide health coverage.
        They raise prices, reducing demand.

        Now taxpayers and the insured save a little money on their premiums since the uninsured don’t raise everyone’s costs.

        Since they now have a little extra money in their pockets, the taxpayer and insured can afford the slightly higher prices for Papa Johns and their net profits remain the same as before.

        The ACA may not be a real cost saver overall, but at least it makes a start in putting all the costs of providing labor back onto the actual beneficiary of that labor.

        I just don’t like the dishonesty of those who cry socialism when we all pay the costs for those who don’t earn a livable wage. Those who use underpaid labor end up with an involuntary transfer of wealth from taxpayers, while under the ACA, which makes the employer pay more of the real costs, I would have a choice whether or not I pay the cost.

        • Those screaming that the ACA is socialism generally don’t realize that low wages necessitate some subsidies for the poor, which is really a form of susidizing business.

          My point is that it is not in any way a subsidy to the employers. The subsidy is to the recipient and that you could end up paying the employee to not work rather than paying him to work if you are not careful.

          Unfortunately the economy does not produce enough high paying jobs. If you attempt to remedy this by forcing the employers to pay higher compensation you are likely to push some people out of work and you will still pay for their healthcare. It is better to tax the higher earners and give some money to lower earners than forcing the employer compensate employees more.

    • Floccina does a very good job of showing how the restaurant industry will shrink under the ACA (or any other pro-employee mandate.)

      That is because our restaurant industry is built on a cheap labor model. Countries that take a stand against repulsive cheap labor (like Germany, Sweden, or Australia, to name a few) have fewer restaurants and much higher prices in their restaurants.

      This does not cause massive unrest or unemployment in those nations, because they have low birth rates and very little immigration.

      America’s problem is that we have a slug of about 40 million people (at least) who do not have high tech skills and never will. In some cases they cannot read or track a bus schedule.

      If a restaurant lays them off, they are not going to be offered a job at Google.

      As much as I dislike cheap labor practices, I sometimes wonder if America needs them.

      Bob Hertz, The Health Care Crusade