Skip to main content

Will Obamacare raise the price of your pizza?

By Aaron E. Carroll, Special to CNN
updated 4:30 PM EDT, Fri August 10, 2012
STORY HIGHLIGHTS
  • Papa John's Pizza's CEO said the Affordable Care Act will raise the cost of his pizza
  • No one thinks government spending is free, says Dr. Aaron E. Carroll
  • Even Americans who get their insurance from their employers pay for their care, he says
  • Carroll: More expensive pizza is a tiny price to pay for the benefits of health care reform

Editor's note: Dr. Aaron E. Carroll is an associate professor of pediatrics at the Indiana University School of Medicine and the director of the university's Center for Health Policy and Professionalism Research. He blogs about health policy at the Incidental Economist.

(CNN) -- Last week, John Schnatter, the founder and CEO of Papa John's Pizza, announced that the Affordable Care Act will raise the cost of his pizza 11 to 14 cents each, or 15 to 20 cents per order. This has caused some to gloat that Obamacare won't be "free" after all but will be passed down to consumers in the form of higher prices.

Well, duh.

For the sake of this discussion, I'm going to ignore the fact that Schnatter is a supporter and fundraiser for Mitt Romney, and take him at his word. I'm also going to assume that his numbers are not inflated at all but represent an accurate representation of what will happen in 2014.

Still -- this isn't news.

Opinion: Why Mitt Romney is losing

Aaron E. Carroll
Aaron E. Carroll

Let's start with the idea, espoused by many who oppose the law, that there is some expectation from those that support the law that health care is "free." It's not, and no one I know defends it as such.

It costs a lot of money to enact the law: The most recent estimate is well over a trillion dollars over the next decade. It is referred to as deficit-reducing, however, because it lowers spending in other areas or collects new revenue, such that its costs are more than paid for. But no one should think that it doesn't cost money.

Moreover, no one should think that individuals won't pay for the law. Of course they will. Everything the government does is paid for by individual Americans, including the Affordable Care Act. That's what taxes are for.

Papa John's CEO mixes pizza & politics
Obama: No apology for health care fight
WSJ slams Romney campaign
Mayor Landrieu: Why health care is smart

What the health care ruling means to you

Some may try to argue that more than half of Americans don't pay any taxes, but they are referring only to federal income tax. Those people still pay payroll taxes, sales taxes, state income taxes, excise taxes and more. When you add all of those up, it turns out that nearly everyone pays taxes.

We're all paying for the Affordable Care Act, just as we all pay for defense spending, we all pay for Medicaid, and we all pay for Social Security. No one thinks government spending is free.

Uninsured Americans who get private insurance in the exchanges are going to pay even more. Even those receiving the largest subsidies will still have to pay for some of their premiums, along with additional out-of-pocket costs. As people earn more, their share of health care spending goes up, too. They all pay.

Even Americans who get their insurance from their employers pay for their care. No one should be under the illusion that their "bosses" are generously picking up the tab. There are many studies that show that premiums and wages offset one another. Employees (read: individuals) pay for their health insurance themselves through lower wages.

So let's stop attacking the Affordable Care Act because it will mean that we -- meaning individual Americans -- are paying for health care. We always do.

Let's circle back around to Papa John's, though. Part of what the act does is mandate that companies start providing health insurance to their employees or pay a penalty. Since some don't do that already, this will cost them money. 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.

This is as it should be. Some companies probably keep costs down by not providing comprehensive health benefits to their employees. Now, they will have to. I imagine some companies already do, which probably increases their costs, and now they will be on a more level playing field. Regardless, Papa John's is telling you that people who order its pizza will now bear the cost of its employees' health insurance.

Again -- as it should be! Should people who don't order Papa John's pizza have to pay for that insurance? That's what's happening now.

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.

Where in the world can you get universal health care?

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?

You may believe that we, as a country, shouldn't pay for care for the uninsured. But most of us are unwilling to let the sick, especially children, suffer. So we -- individual Americans -- have been paying for this health care, saving those companies money, regardless of whether we availed ourselves of their services. No longer. Under the Affordable Care Act, those costs will be the responsibility of those businesses and eventually their customers.

One last point. My kids happen to love Papa John's. Some Saturdays, when my wife and I go out, they will order pizza from there. The usual delivery runs about $20. According to Schnatter, the cost of health insurance to his employees might raise the price about 1%. If it had gone up twice that because of a pepperoni shortage, I doubt it would have made the news at all.

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.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions in this commentary are solely those of Aaron E. Carroll.

ADVERTISEMENT
Part of complete coverage on
updated 12:53 PM EDT, Tue September 30, 2014
Jeff Yang calls Ello a wakeup call to Facebook and Twitter, and a sign of hope for fast-rising upstarts Pinterest and Snapchat.
updated 6:48 PM EDT, Tue September 30, 2014
Paul Waldman says the Secret Service should examine its procedures to make sure there are no threats to the White House--but without losing the openness so valuable to democracy
updated 4:49 PM EDT, Tue September 30, 2014
Jesse Williams says the videotape and 911 call that resulted in police gunning down John Crawford at a Walmart reveals the fatal injustice of racial assumptions
updated 7:03 PM EDT, Tue September 30, 2014
Mel Robbins says officials should drop the P.C. pose: The beheading in Oklahoma was not workplace violence. Plenty of evidence shows Alton Nolen was an admirer of ISIS.
updated 3:11 PM EDT, Tue September 30, 2014
The Occupy Central movement has already achieved much by bringing greater attention to Hong Kong's struggle for democracy, William Piekos says..
updated 3:11 PM EDT, Tue September 30, 2014
The Occupy Central movement has already achieved much by bringing greater attention to Hong Kong's struggle for democracy, writes William Piekos.
updated 10:13 AM EDT, Tue September 30, 2014
As Prime Minister Narendra Modi visits America, Madeleine Albright says a world roiled by conflict needs these two great democracies to commit to moving their partnership forward
updated 10:04 AM EDT, Tue September 30, 2014
John Sutter: Lake Providence, Louisiana, is the parish seat of the "most unequal place in America." And until somewhat recently, the poor side of town was invisible on Google Street View.
updated 9:11 AM EDT, Mon September 29, 2014
Julian Zelizer says in the run up to the 2016 election the party faces divisions on its approach to the U.S.'s place in the world
updated 10:19 AM EDT, Mon September 29, 2014
Ruben Navarrette says Common Core supporters can't devise a new set of standards and then fail to effectively sell it.
updated 9:29 AM EDT, Tue September 30, 2014
Earlier this month, Kenyans commemorated the heinous attack on the Westgate Mall in Nairobi.
updated 2:59 PM EDT, Tue September 30, 2014
David Wheeler says Colorado students are right to protest curriculum changes that downplays civil disobedience.
updated 9:58 PM EDT, Fri September 26, 2014
Sally Kohn says when people click on hacked celebrity photos or ISIS videos, they are encouraging the bad guys.
updated 7:55 AM EDT, Fri September 26, 2014
Loren Bunche says she walked by a homeless man every day and felt bad about it -- until one day she paused to get to know him
updated 9:32 AM EDT, Tue September 30, 2014
ISIS grabs headlines on social media, but hateful speech is no match for moderate voices, says Nadia Oweidat.
updated 8:33 AM EDT, Mon September 29, 2014
A new report counts jihadists fighting globally. The verdict? The threat isn't that big, says Peter Bergen.
updated 5:37 PM EDT, Tue September 23, 2014
Ebola could become the biggest humanitarian disaster in a generation, writes former British Prime Minister Tony Blair
updated 12:58 PM EDT, Fri September 26, 2014
ISIS has shocked the world. But will releasing videos of executions backfire? Four experts give their take.
updated 10:39 AM EDT, Fri September 26, 2014
Eric Holder kicked off his stormy tenure as attorney general with a challenge to the public that set tone for six turbulent years as top law-enforcement officer.
updated 9:09 AM EDT, Fri September 26, 2014
LZ Granderson says Obama was elected as a war-ending change agent, not a leader who would leave behind for his successor new engagement in Iraq and Syria. Is he as disappointed as the rest of us?
updated 5:10 AM EDT, Wed September 24, 2014
Gayle Lemmon says the question now is how to translate all the high-profile feminizing into real gains for women
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT