NCPA - National Center for Policy Analysis


July 8, 2010

The White Castle hamburger chain fears that President Obama's health insurance reform bill adopted earlier this year will put its profits on a downward slide.  

The Columbus-based family-owned restaurant chain -- known for serving small square hamburgers called "sliders" -- says a single provision in the bill will eat up roughly 55 percent of its yearly net income after 2014: 

  • Starting that year, the bill levies a $3,000-per-employee penalty on companies whose workers pay more than 9.5 percent of household income in premiums for company-provided insurance.
  • White Castle, which currently provides insurance to all of its full-time workers and picks up 70 percent to 89 percent of their premium costs, believes it will likely end up paying those penalties.  

The financial hit will make it hard for the company to maintain its 421 restaurants, let alone create new jobs, says company spokesman Jamie Richardson.  White Castle employs more than 10,000 people nationwide, and more than 1,200 in Ohio. 

White Castle has been offering health care to its employees since 1924.  It pays 70 percent to 90 percent of health care costs for those employees.  The company cannot be considered one of the health care system's bad actors, says the Weekly Standard.  But when good behavior is punished, you will not get more of it.  Now, the company says it will consider dropping employee-based coverage and putting employees in federal exchanges. 

The International House of Pancakes (IHOP) will not be spared, either: 

  • George Ebinger of New Jersey, who owns several IHOP restaurants, says the penalties for not insuring his 140 workers will cost roughly half as much as insuring them.
  • He figures he will have to raise prices and possibly lay off workers to come up with the $220,000 he anticipates the penalties will cost. 

Source: Mary Katharine Ham, "It's Come to This: ObamaCare Threatens White Castle," Weekly Standard, July 6, 2010. 

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