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Small businesses fume, now seeing 'Obamacare' as unavoidable

Election 2012 ended hopes among small businesses that Obama's health-care law would be upended. Papa John's and others are threatening layoffs and higher consumer prices, citing added costs of doing business under 'Obamacare.'

By Staff writer / November 16, 2012

Papa John's Founder, Chairman and CEO John Schnatter points to his image on the NASDAQ tower in New York's Times Square, in September, while celebrating the opening of the brand's 4,000th global restaurant. The pizza magnate says he is likely to reduce worker hours at the pizza chain to avoid having to pay for their health care.

Diane Bondareff/Invision for Papa John's International/AP/File

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With the 2012 election ending their hopes for a reprieve from President Obama's sweeping health-care reform law, a number of business owners across the US are threatening to lay off workers, slash employee hours, or add surcharges to their services, citing higher costs of doing business once all the provisions of "Obamacare" kick in.

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The Affordable Care Act (ACA) of 2010 requires companies with more than 50 workers to provide health insurance to employees who work at least 30 hours a week, starting in January 2014. If they don't, they must pay the government $2,000 a year for each full-time employee minus the first 30 workers.

Among the businesses that have gone public with their concerns are the following:

Papa John's International CEO John Schnatter says he is likely to reduce worker hours at the pizza chain to avoid having to pay for their health care. Obamacare will cost his company $5 million to $8 million each year, or 11 to 14 cents a pizza, he told the Naples Daily News in Florida over the summer. 

• John Metz, a Florida franchise owner of several restaurant chains, including 48 Hurricane Grill & Wings, 40 Denny’s and several Dairy Queen, says he plans to cut employee hours and add a 5 percent surcharge to customer bills as of January 2014. “Everyone’s looking for a way to not have to provide insurance for their employees," Mr. Metz told Fox News on Thursday. "It’s essentially a huge tax on all us business people.”

• Zane Tankel, CEO of Apple-Metro, which operates 40 Applebee’s franchises in the New York City area, says expected health-care costs will prevent him from expanding or making new hires. “In this environment you can’t raise prices … so then it’s cut back on overhead,” he told Fox Business Network last week.

The reform law puts companies with already-slim profit margins in a bind, especially if they pay minimum wage, says Adam Powell, president of Payer+Provider Syndicate, a health services consulting firm in Boston.

“Given that many restaurant employees were earning the minimum wage before [Obamacare], it is often not possible for employers to decrease wages to cover the cost of providing insurance,” Mr. Powell says. Employers "must either pay the penalty or increase the value of their total benefit package by adding [health] insurance. In either scenario, the law increases the cost of maintaining a minimum-wage full-time employee.”

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