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Will Obamacare Raise the Price of a Big Mac?

In exchange for lower health premiums under Obamacare, some experts say shoppers could pay higher prices on everything from printer paper to French fries.

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Complying with the Affordable Care Act will cost as much as $420 million annually, McDonald’s CFO Peter Bensen said during a conference call Monday, according to CFO Journal. And when the new law goes fully into effect in 2014, it’s possible menu prices will be raised to cover the health costs.

Analysts say businesses with a large number of hourly wage workers, who traditionally had minimal or no health insurance—from fast food joints to retailers—may have to adopt a similar strategy. “I would expect prices at McDonald’s (MCD) to go up,” says Les Funtleyder, who manages a health care fund at Poliwogg, a hedge and venture capital firm. (A McDonald’s spokeswoman says the company doesn’t set prices for its franchised restaurants, which represent about 90% of its 14,000 U.S. outposts, and that “it would be premature and inaccurate to speculate on raising menu prices to offset these costs.”)

But experts say the price hikes could extend beyond chicken McNuggets. Some analysts believe companies may use health care as an excuse to raise prices, even if the added costs don’t warrant the increase. Peter Saleh, a restaurant analyst at Telsey Advisory Group, expects sit-down diners at restaurants like The Olive Garden, owned by Darden Restaurants (DRI), and The Cheesecake Factory (CAKE), which own a greater proportion of their locations than some fast food chains, to eventually pay at least 2% more to eat there. But Saleh says it’s too soon to know how the companies will cope with the new mandates: “A lot of them at this point aren’t willing to give us estimates about it.”

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Businesses bracing for additional costs as a result of the health-care law tend to be those that previously provided barebones coverage, or so-called “mini-med plans,” which charge low premiums but provide limited benefits, according to a spokesman for the Department of Health and Human Services. These companies represent less than 2% of the market, according to the spokesman. Starbucks, on the other hand, doesn’t anticipate additional expenses to insure its employees because its benefits already meet the standards of theAffordable Care Act, CFO Journal reports.

Even if companies haven’t publicly discussed whether their increased health-care costs will trickle down to their price tags, executives have floated the possibility in meetings with investment pros. Nicholas Olesen, a financial planner with The Philadelphia Group, says his clients at large pharmaceutical and software companies have suggested that they may raise prices 2 or 3% while their employees pay up to 7% more in insurance premiums.

Still, says Funtleyder, it’s in consumers’ best interest for companies to keep their wage workers insured because they typically represent the young, healthy portion of the insurance market — and therefore their premiums subsidize the cost of care throughout the system. “If you have to pay more for your happy meal, you might have to pay less elsewhere,” Funtleyder says.


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    • I quit buying them when the price went over a buck. See Obama care is working now you might get healthy like me.
      While on the subject can anyone tell me why my employer should have anything what so ever to do with my health care.

    • Don’t fall for the line that Massachusetts insurance refrom is the same as Obamacare. From you column it appears that you have. Sorry for you to have been deceived by whitehouse talking points. Obama needs you to think so and has tried so hard to make Romney out to be just like him. Its a lie.Romney’s plan, the original bill he signed, has little in common with Obamacare which set up multiple gargantuan bureacracies to regulate health care and take decisions away from doctors and patients. It has caused employers to drop coverage in advance of its implementation. It raises premiums. But premiums went down in Massachusetts when it was first inacted. Also, more MA employers extended coverage to their employers, which was a pleasant result and unexpected. Romney’s plan kept health care decisions with doctors and patients while Obamacare creates decision boards and so called death panels. The narrative in the press is that they are one in the same, Romney’s plan and Obamacare. This helps Obama as he positions himself for 2012 and weakens Romney. But wise up! Its a false assertion. If you beleive this its because you have gotten your info from Obama’s talking points and a liberal media who prefer Palin because they think that would make 2012 so much more fun. Romney’s bill was only 70 pages and not shoved down voters throats. Its was bipartisan and gratefully received by providers, patients and insurance companies whose concerns were all addressed over a two year process. This was insurance refrom not healthcare refrom Obama care is healthcare refrom no its health care industry takeover. On the road to socialized medicine. Romney’s plan keeps healthcare in the private sector and that my friend is a HUGE difference. Take the wool off from your eyes. Don’t be deceived by those who want you to think they are the same. And if you think Fox News offering of snippets of Romney defending his plan was weak, I submit you are letting the media lead you to your conclusions rather thatn searching it out for yourself. I have heard him well-defend it as conservative and creative way of spending money they were already receiving for free care at hospitals and putting it toward insurance instead.So until you know a way to bring insurance to the uninsured, I would ask that you stop comparing Romney’s to Obama’s. While Romney’s was focused on the uninsured, Obama’s clearly focused taking over healthcare fo all mankind. That is the major thrust of it. So figure out a better way and lets compare that to Romney’s plan. And I mean Romney’s plan, NOT the derivative of it that now exists after five years of democrat tinkering.An another thing. What in the world does your being a Mormon have to do with anything? Why even bring it up? When is there ever going to be a faithblind society if you keep bringing that up? It doesn’t matter what your religion is or what any presidential candidate’s religion is. Period.Lori,Again, I have not heard the White House say anything about Romney. This is my own reaction. The only people I have heard questioning this position of Romney’s are conservative commentators.And as to a faithblind society, my point is that I am NOT for Romney, in spite of our similar religious beliefs. But I am confident that a poll would reveal a strong correlation between being an LDS Republican and being pro-Romney.I do, however, believe it entirely appropriate to weigh a candidate’s religious beliefs in deciding whether or not to vote for him or her. For me, I am mostly interested in how faithful they are to those beliefs, whatever they are, than in which particular religion they espouse. Here in Mesa, when I heard that our recently released stake president was running for the state legislature, I signed up to help his campaign and voted for him. In that case I knew him personally and knew he was a good man of solid integrity and a strong conservative. I don’t think there’s anything wrong with that.

    • The sun had set, but the stars had yet to appear; and I could hear the lcstous from the trees across the water. We held hands, walking silently along the path; a fish splashed along the bank as we passed, sending ripples into the rocks. The trail took a slight bend and I helped her up the rise to the bench which overlooked the river.

    • Obama screwed the young generation by imposing fees and expense in everything they buy including the food, entertainment and travel.
      This is just the beginning, wait till the obamacare penalties kick in in 2014.

    • Of course bus will raise prices and it will be to increase their profit margin, ins cost will just be the excuse they use. Profit, the same reason most bus will not hire. Why should they, everyone scared of their job and 1 person doing the work of 3. The perfect scenario for business. Keep listening to the Romney crowd and their will only be the rich bus owners and the rest of us struggling to eat. The rich have never felt so threatened.

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