Wednesday, August 15, 2012

How Much Will Health Care Reform Cost Your Consumers?

By Stephen Tweed

Sitting on at airplane this afternoon on my way to Atlanta, I saw an interesting tid bit under the title, "Notable and Quotable".  The writer, Jonathan Tobin, said "there may be some voters who are indifferent to the impact on the economy of health care reform... But will they stand for an increase in the price of Pizza".

Then he goes on to quote our neighbor here in Anchorage, KY, John Schnatter.  John is Papa John of Papa John's Pizza.  John says Healthcare reform will cost his company 11 to 14 cents per pizza, and 15 to 20 cents per order filled.  John says that "the Obamacare government surcharge will be passed on to consumers".

That raises the question of how much the new law will add to the consumer's cost of a Big Mac, or a Coke?  Tobin suggests that this across-the-board surtax on virtually all expenditures will hit the poor a lot harder than the rich.

So what impact will this have on us in home health care, hospice, and private duty home care?  Well first, the cost to provide insurance for our employees will go up.  Then the cost of everything we buy will go up.  In home health and hospice, we won't be able to pass it on to consumers, because Medicare and Medicaid pay the bills.  Half of the cost of health care reform is being paid for through reductions in payments to health care providers including $500 billion in Medicare cuts.

For private duty home care, the added costs can't be passed on to Medicaid Waiver, so they will be passed on to private pay consumers.  How much more will you have to charge per hour to pay for the added costs?

Reading this brief quote from Papa John has causes me to question how much cost we will have to pass on to you, our consumer, when you attend a seminar, when you attend your state association conference, when you register for a webinar, or when you buy an eBook.

When you throw a pebble in a pond, the ripples continue out to the edges of the pond.  What will be the ripple effect of paying 15 cents more for Pizza to cover the cost of healthcare reform?

I'd love your comments on this concept.


  1. I don't believe we can even begin to quantify the full ripple effect yet. It could be huge. As a corporate level financial executive, I haven't heard any estimates on increased administrative costs. I don't offer any specific numbers either but I would suggest that's another area where ACA will increase overhead; perhaps substantially. ie: W-2 reporting changes alone require an investment into revamping my current payroll process.

  2. Anonymous8:10 PM

    The ripple effect may be a good analogy for some things but I do not beleve it applies to the cost Healthcare Reform. In fact throwing out numbers like .15 per pizza added cost to compensate for the cost of providing health coverage his staff sounds like a real bargin. That's only $157.50 per month at each Papa John's location. (being generous use 1050 pizza's per month x .15 = $157.50) They have 2600 U.S. locations that sell 15 to 18 million pizzas per year, do the math. If I could get insurance for my staff that cheap it would save me money!
    Better employee retention = less recruiting costs.

    The only ripple effect is the rising cost of healthcare services because hospitals and other medical facilities are forced to pass on the cost of providing services to the uninsured causing. The increase in their billing makes the rest of our insurance premiums increase, etc. Papa John's pizza's are great, but his cost accounting needs work.