Papa John's CEO talks 'Obamacare' with FL college students


by Joe Arnold

Posted on November 12, 2012 at 3:25 PM

Updated Tuesday, Oct 1 at 5:45 AM

Editors Note: Though the video of this story was posted on the day it aired, November 12, 2012,  the original copy (written version) that accompanied this story was provided by ABC News.  The WHAS11 copy can now be found below:

LOUISVILLE, Ky (WHAS11) -- Papa Johns founder John Schnatter is back in the headlines after more comments about President Barack Obama's healthcare reform law.

Schnatter says owners of Papa Johns stores may choose to cut the hours of some part time workers to avoid having to provide them health insurance. Yet, Schnatter also disclosed that it is "good news" that "100 percent of the population is going to have health insurance. We're all going to pay for it." 

Schnatter spoke the day after the election to students at Edison State College in Florida. Naples Daily News reporter Jennifer Lipscomb recorded his comments - and provided the recording exclusively to WHAS11 News.

On the tape, Schnatter does not say that he wants to cut worker hours - but that he expects franchise owners will cut hours because they can't afford the costs of health insurance plans.

"That's probably what's going to happen.  It's common sense. That's what I call lose-lose,"  Schnatter told the students.

And Papa Johns is certainly not alone.

By 2014, employers with the equivalent of at least 50 full-time workers will be required to provide health care for to employees who work 30 or more hours a week.  Or, if they choose not to offer health care to those employees, the companies can pay a $2,000 penalty per employee after the first 30 workers.

"Are we going to see an explosion in more part time workers?  Probably," said Dr. Jose Fernandez, a University of Louisville Economics Professor.  "And the reason is some of these full timers are going to be pushed down.  Are we going to see firms restrict the size of their plants?  Yes."

When Schnatter was asked by Lipscomb about the health care law's effect on Papa John's he acknowledged a controversy in August when he told stock analysts that Papa Johns would pass along the cost of "Obamacare" to customers - 11 to 14 cents per pizza.

"Obamacare, I got in a bunch of trouble for this," Schnatter said.

"As a business, that's what you do, is you pass on costs," Schnatter said.  "I don't get taxes.  All I do is collect them.  the government tells me what to charge in taxes.  I just collect them and pass them on to the government."

"Obamacare has been deemed a tax," Schnatter continued.  "Unfortunately, I don't think people know what they're going to pay for this.  I'm not pro or against because we've always wanted 100 percent of our employees on health care. Our business is set up with minimum wage, and most folks come in at a young age where we never had people on insurance.  We only had a third of our folks on insurance."

"I like the fact that 100 percent of all Americans are now going to have health insurance. I think that's good," Schnatter told the students.  "It's just the way it's been kind of ramrodded down our throats. I question if that was the right thing or not."

WHAS11's attempts to reach Schnatter and Papa John's were unsuccessful.

Because most Papa Johns stores are independently owned franchises, it's unclear whether the 50 employee health care mandate applies to overall companies or individual locations.

"There's going to be a legal battle there," Fernandez said.  "I think its going to be arguable.  If it's the same person signing all the checks, you might consider that the same firm.  If you can somehow spin that off and say they are operating independently of your power, than those are separate firms."

Fernandez agreed with Schnatter, that some businesses will have an incentive to cut some workers' hours.

"Some of these part time workers will face a reduction in hours or at the very minimum a reallocation of their hours worked," Fernandez said.  "Where you couldn't do something to the effect of, 'I'm going to work three weeks really hard this month and then have that last week off,' Instead you're going to spread those hours over the full four weeks."

( -- The CEO and founder of Papa John's pizza wants investors to know that when the president's health care law takes effect, the price of pizza is going up with it.

According to "Papa" John Schnatter, the cost of providing health insurance for all of his pizza chain's uninsured, full-time employees comes out to about 14 cents on a large pizza. That's less than adding an extra topping and a third the price of an extra pepperoncini. If you want that piping hot pie delivered, the $2 delivery fee will cost you 14 times as much as that health insurance price hike.

"We're not supportive of Obamacare, like most businesses in our industry," Schnatter said on a conference call with shareholders last week, as reported by Politico. "If Obamacare is in fact not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders' best interests."

The pizza place's Facebook page was soon littered with outraged pizza lovers proclaiming they would be "happy" to pay an extra 11 to 14 cents so Papa John's employees could have health insurance.
 "I lose more than that in a week under my sofa cushion," one Facebook commenter wrote. "I'd gladly pay 20 cents for a child to go to a doctor when they've got a cold, rather than have them show up at the ER."

Another said she's taking her money to another pizza restaurant, "one that doesn't begrudge their employees the ability to seek a doctor when they're ill."

The company sought to clarify Schattner's comments on Wednesday, telling ABC News in a statement that Schnatter's remarks were in direct response to a question about the costs of complying with President Obama's health care law.

"We certainly understand the importance of healthcare to our customers, our employees, small business owners and their employees," the company said.

But despite the pizza price increase, many of Papa John's employees may still go without employer-provided health insurance after the law takes effect in 2014. The company would not say how many of its employees are uninsured, but in 2010 the service industry had one of the lowest rates of insured employees, with 33 percent of the workforce uninsured, according to the Kaiser Family Foundation.

Large businesses, those with more than 50 employees, are the only ones on the hook for providing health insurance under the health reform law. While Papa John's as a whole employs 16,500 people, 80 percent of the company's restaurants are independently owned franchises. As long as a franchise owner does not employ more than 50 people, he or she does not have to pay for employee health insurance.

The Affordable Care Act only requires employers to offer health insurance to full-time employees, almost 90 percent of whom at large businesses like Papa John's corporate offices are already covered, according to a Treasury Department official.

If the pizza company decides not to cover any full-time employees who are not currently insured, it will be hit with a $2,000 fine for each employee beyond the first 30 workers.

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