Spaghetti with Regulation Sauce

by KATE HAVARD, weeklystandard.com
December 31st 2012

Restaurant owners work overtime to figure out Obamacare.

The owner of an Italian restaurant in Baltimore was going to talk to me about how his business was preparing for Obamacare, now that it is going to be the law of the land. But seeing the backlash faced by other businessmen who dared to suggest the law might have a less than salubrious impact on their businesses, he was having second thoughts.

On the day after the election, Papa John's CEO John Schnatter got in trouble after speaking to a group of college students about small businesses. Asked whether he thought Papa John's franchise owners might "cut people's hours back.  .  . so they wouldn't have to pay for health insurance," Schnatter responded, "It's common sense. That's what I call lose-lose."

An honest, almost innocuous answer. Yet the media portrayed Schnatter as the Pizza Grinch, scheming to snatch health care from the hands of his struggling employees just before Christmas.

Liberal groups announced boycotts, the company's Facebook page comments were filled with ire, Jon Stewart called Schnatter and other CEOs critical of the health care law "a—holes" on TV.

A survey by YouGov seemed to indicate that Papa John's "brand index" had dropped in the days following the fray. The media liked the idea that a businessman was being punished for saying that an expensive health care law was going to be expensive. "Restaurant Brands Suffering After Obamacare Rants," read a headline in Slate. The Huffington Post piled on: "Papa John's Obamacare Stance Costs Company Its Reputation."

Schnatter stepped in to do damage control, writing an op-ed in which he assured readers that he intended to comply with the law and was indeed "cool with" people having health insurance.

Other businessmen who publicly speculated about the effects this law would have on their businesses, like The Cheesecake Factory CEO David Overton and Denny's franchise owner John Metz, also came under fire.

"That's not something you want to find out on December 31, 2013, and then have to implement it on January 1, 2014," says Michelle Reinke, a health care expert at the National Restaurant Association.

She says that throughout the regulatory public comment process, the association has requested flexibility with certain regulations, and hopes things will become clearer once the "guidance" hardens into rules. "Restaurant owners need to educate themselves about how the law will impact their business and their employees," she said. "But until all the rules are on the table, it's hard to make decisions about the future."

For businessmen like the Italian restaurant owner, the uncertainty is the crusher. He doesn't know yet whether he'll be in the over-50 or under-50 employees category, so all he can do is hunker down and try to collect his data. He doesn't know if he'll be able to afford the health insurance plan he currently has for his employees once more of his workers qualify (until now, he has counted 34 hours per week, not 30, as full time). Does he need to change plans? If he's not at the 50-employee mark, will he be able to afford covering any of his employees or have to drop health coverage altogether?

All of this remains unclear. There is something, however, that he knows for sure. In the 1990s, he grew the restaurant, tacking on a sprawling complex to the little bar and kitchen where his Italian immigrant parents served spaghetti and meatballs starting in the early 1950s. He doubled its size.

He also laid the groundwork for further expansion. "When we re-engineered this building, we left in place the structure to support a 120-seat catering hall on the second level," he says. Now, it's out of the question.

"I'd always thought I'd do what my dad did," he says. "He was working in here till he was 73 and had a massive heart attack and died."

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