Companies Weigh Health Care Costs | Video

Retha Colclasure | 11/16/2012

Today had originally been the deadline for states to decide if they would set up their own health care exchanges, a system of standardized health insurance plans for individuals to buy their own health care from, when the new Affordable Care Act goes into effect. That deadline was extended for about another month yesterday.

But many companies aren`t waiting to make decisions about offering health care to their employees and those decisions are often coming under fire.

Better ingredients, better pizza, better get your own health insurance.

That`s the message some say the founder and CEO of Papa John`s pizza is sending after announcing that he may scale back employees` hours so as to not have to provide them with health care coverage under the Patient Protection and Affordable Care Act. Those comments sparked a backlash and threatened boycott from people furious that a multi-million dollar company would choose to pay a fine rather than pay for health care.

But others say it`s a simple business decision.

"Health care on average costs a lot more than $2,000 per year. The average employee cost for a company for a basic plan is probably $6 to $7,000 a year," said Chip Carter with Fairway Partners.

Chip Carter works with insurance policies and coverages for companies all over the country.

"When you get a company like Papa Johns that is saying they`re not going to offer health insurance or they`re going to cut all their employees down to less than 30 hours a week, then what they`re saying is they can`t afford to offer health insurance on a full time basis going forward," Carter said.

Many restaurant franchises don`t offer health care to employees right now. Some will offer it just to management staff, others offer a very limited plan that wouldn`t meet the law`s new requirements. Because of the changes under the law, Papa John`s is just one of dozens of companies that have publicly said they`ll make changes of their own in the way they hire and use employees to avoid paying for coverage and avoid paying the penalty.

"It makes all the sense in the world if you are an entrepreneur and you look at an option and if you insure your company and it costs you $5 or $6,000 per employee per year, and the government gives you an option to only pay a $2,000 penalty, if you`re just looking at the bottom line, why would you offer your employee health insurance?" Carter said.

A Hudson Institute Study in 2011 backs that line of thought. After surveying franchise owners nationwide, the study concludes that the new health care act will add $6.4 billion in additional costs to franchises. Carter says when looking at those numbers, many companies are also looking at the fact that their employees will still have access to health care, even if it`s not provided at work. That`s because anyone will be able to buy health insurance on a federal exchange.

But he says he doesn`t think people are prepared for the monthly sticker shock that will come along with that.

"I think it`ll be probably $6 to $700 for a single person, depending on the plan," he said.

The other concern Carter has, those prices could go up, because the only people in the exchange will be sick people since the tax penalty to go without insurance is just $95 per person per year.

Not everyone is opposed to Papa John`s plans. While some had threatened to boycott the chain, others attempted to organize a show of support, and were encouraging people to buy pizza from the store today.

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