Pizza, Burgers and Health Care Reform

The devastating side effects of the Affordable Care Act are multiplying every day. It’s not uncommon to hear that premiums are rising, about 7 percent next year, according to the National Business Group on Health, or that we’re facing a doctor shortage.

A new study published on Health Affairs found a third of Medicaid doctors will take no new patients while a Doctors Company survey reported 43 percent of physicians are likely to retire in the next five years due to ACA.

But one side effect you probably didn’t expect was an increase in your fast food bill. That’s right, ACA will not only increase your health insurance premiums, but also the cost of pizza and burgers. That’s because the law raises the minimum level of health coverage that most employers must provide to workers—or requires them to pay a tax if they don’t comply.

According to Papa John’s founder John Schnatter, the law’s mandates will add about 11 to 14 cents to every pizza. While that doesn’t sound like a lot, consider that Papa John’s isn’t the only fast food chain indicating costs will rise. In the Wall Street Journal, both McDonald’s and Burger King executives hinted ACA’s costs will lead many franchise owners to raise prices. And that’s despite a waiver granted to McDonald’s so they could continue their basic health care plans below the thresholds required in ACA.

McDonald’s Corp. Chief Financial Officer Peter Bensen told analysts last week that the law will add between $10,000 and $30,000 in added annual costs to each of the 14,000 McDonald’s restaurants in the U.S., 89% of which are franchisee-owned.

Many of our franchisees will struggle with how to reconcile the financial implications…and will likely take other measures to reduce costs, according to Steven Wiborg, head of Burger King’s North American operations.

For more on the financial consequences of ACA, see the Tax Foundation’s list of 20 new or higher taxes contained in the law.