# White Castle gross cut in half by Obamacare? **URL:** \ **Category:** Great Debates\ **Created:** [June 13, 2010, 10:49pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055 "2010-06-13T22:49:33Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [June 14, 2010, 6:26pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/21 "2010-06-14T18:26:41Z")
> [@xtisme](#): > > No, they don’t seem to be contradictory, just spinning the story differently. I seriously doubt that WC will take a 50% hit to their profit (possibly no hit at all, if they increase prices and reduce costs). I really just offered that quote tongue in cheek, to be honest I have no dog in this fight and don’t know if WC’s CEO is full of shit, but have to point out that they cannot have “no hit at all” by increasing prices and reducing costs. If they could make more money by hiking prices and reducing costs, then they would have already done that and pocketed the extra money. If the new health care regime does in fact cost White Castle more money, it will cost them more money and nothing can chane that; their ideal burger price or cost structure may change in some way that mitigates it, but there’s no possible way it wouldn’t cost them something. Again, I’m speaking in economic generalities; I don’t know if Obamacare actually will cost them more money. My point is that if it does cost them money they cannot magically price themselves out of that loss. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 14, 2010, 6:29pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/22 "2010-06-14T18:29:48Z")
> [@Kimstu](#): > > In any case, it doesn’t surprise me at all that some companies may have to raise prices somewhat to cover the costs of the new requirements for employee insurance. It is the natural result of universalizing employer based healthcare. > [@](#): > > ell, insuring more people intrinsically costs more than insuring fewer people. That depends on the level of health care you end up with. I think we provide too much right now. ---
**Author:** ![billfish678](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@billfish678](https://boards.straightdope.com/u/billfish678)\ **Post date:** [June 14, 2010, 6:33pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/23 "2010-06-14T18:33:34Z")
> [@RickJay](#): > > Again, I’m speaking in economic generalities; I don’t know if Obamacare actually will cost them more money. My point is that if it does cost them money they cannot magically price themselves out of that loss. Jerry, They just write the loss off. Write it off, Jerry :rolleyes: ---
**Author:** ![kaylasdad99](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kaylasdad99/32/3398_2.png) [@kaylasdad99](https://boards.straightdope.com/u/kaylasdad99)\ **Post date:** [June 14, 2010, 6:51pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/24 "2010-06-14T18:51:18Z")
I think the use of the term “Obamacare” in any debate of healthcare reform legislation passed this year constitutes a threadshit that places a huge encumbrance upon the validity of any arguments the user makes (as well as casting into doubt the likelihood that the user is interested in an honest discussion of the merits and demerits of that legislation). ---
**Author:** ![CurtC](https://avatars.discourse-cdn.com/v4/letter/c/ce73a5/32.png) [@CurtC](https://boards.straightdope.com/u/CurtC)\ **Post date:** [June 14, 2010, 7:05pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/25 "2010-06-14T19:05:31Z")
> [@RickJay](#): > > Again, I’m speaking in economic generalities; I don’t know if Obamacare actually will cost them more money. My point is that if it does cost them money they cannot magically price themselves out of that loss. You’re talking about the case where WC could have chosen to increase prices by themselves. In the Obamacare situation, WC’s competitors would also be held to the same constraints, and it’s conceivable that WC could increase prices and be making just as much profit as before. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 14, 2010, 8:13pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/26 "2010-06-14T20:13:54Z")
> [@CurtC](#): > > You’re talking about the case where WC could have chosen to increase prices by themselves. In the Obamacare situation, WC’s competitors would also be held to the same constraints, and it’s conceivable that WC could increase prices and be making just as much profit as before. It doesn’t work that way. People will only spend so much money on fast food. Right now the trend is to offer cheaper versions of burgers. Something like this could easily shift money away from White Castle and toward self serve food from gas stations. There is nothing stopping people from buying frozen sliders and microwaving them at a Speedway. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [June 14, 2010, 9:34pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/27 "2010-06-14T21:34:06Z")
> [@Magiver](#): > > It doesn’t work that way. People will only spend so much money on fast food. What orifice did you pull that gem out of? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 14, 2010, 10:01pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/28 "2010-06-14T22:01:12Z")
> [@doreen](#): > > But you **have** coverage. If the coverage White Castle offers employees costs White Castle $5000 per year, but most employees don’t take the coverage because they can’t afford their share of the premium, then White Castle’s cost is zero for those employees and they are the ones who are likely to be eligible for the government subsidies, causing White Castle to pay the penalty. I thought he was talking about the coverage being so good employees didn’t have to pay. Let’s look at your case. Certainly employers can price healthcare so high that no employee can afford it. If this happens today, the the employer saves the cost of a reasonable healthcare program, and the cost of whatever care the employee does get is dumped onto the government and people who do pay. (I’m assuming that purchasing healthcare individually would be even more expensive than a group employer plan.) The new system has employers paying for at least part of this social cost. I haven’t (and don’t have time to) analyze the situation deeply enough to know if $2,000 is enough - it is probably a political compromise in any case. ---
**Author:** ![Una\_Persson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/una_persson/32/346_2.png) [@Una\_Persson](https://boards.straightdope.com/u/Una_Persson)\ **Post date:** [June 14, 2010, 10:01pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/29 "2010-06-14T22:01:51Z")
> [@SenorBeef](#): > > So they have to pay $3000-(cost of old policy) per year, right? What does the average employer contribution to insurance premiums run? I’m guessing some significant chunk of $3000, so if that were the case we’re talking about a few extra hundred bucks per employee per year. Are they running on such thin margins that that cuts their profits in half? As a sample size of 1, my employer contributes about $1,000 per _month_ for my health insurance. Then again, I have fantastic health insurance. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 14, 2010, 10:10pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/30 "2010-06-14T22:10:15Z")
> [@RickJay](#): > > I have no dog in this fight and don’t know if WC’s CEO is full of shit, but have to point out that they cannot have “no hit at all” by increasing prices and reducing costs. If they could make more money by hiking prices and reducing costs, then they would have already done that and pocketed the extra money. If the new health care regime does in fact cost White Castle more money, it will cost them more money and nothing can chane that; their ideal burger price or cost structure may change in some way that mitigates it, but there’s no possible way it wouldn’t cost them something. > > Again, I’m speaking in economic generalities; I don’t know if Obamacare actually will cost them more money. My point is that if it does cost them money they cannot magically price themselves out of that loss. However, the current cost and profit structure for companies like this is built around socializing the cost of health care, in other words increasing their profits and/or reducing their costs by making larger society pay - including those people and companies who do not socialize these costs. Assuming that we as a society are not willing to let those who cannot afford healthcare under the current system (and this includes low paid workers rather than the truly poor who are covered under Medicaid) why subsidize White Castle and its customers as opposed to Inn’N’Out who, for the purposes of argument, pay health care? Whenever you restore equity, those who are profiting from inequity will suffer. I’m sure the profits of those utilizing child labor or saving money by keeping unsafe factories were hurt also, as was the profits of companies saving money by discharging waste into public waterways. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [June 14, 2010, 10:24pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/31 "2010-06-14T22:24:15Z")
**Voyager:** I’m sorry; I am honestly trying to understand what you’re saying, and I just don’t get how it relates to what I’m saying. You’re talking about socializing inequity, or something. Sure, okay. I dunno what child labor has to do with anything I wrote. I’m not saying anything about whether or not the USA should have a universal health insurance system. > [@CurtC](#): > > You’re talking about the case where WC could have chosen to increase prices by themselves. In the Obamacare situation, WC’s competitors would also be held to the same constraints, and it’s conceivable that WC could increase prices and be making just as much profit as before. Of course if ALL fast food joints raised prices simultaneously, it’s possible WC might make as much money. But even then, consumer dollars would probably flow from burger joints in general to cheaper food choices. **If in fact WC’s CEO is not full of shit** and this will hit WC as hard as he claims (which, to be honest, I don’t believe) one would expect that purveyors of food who have existing health care plans and so aren’t hit by Obamacare will take some of WC’s sales by not having to raise prices. You cannot price cost increases away unless you’re an absolute monopoly with little or no elasticity of demand. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 14, 2010, 10:24pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/32 "2010-06-14T22:24:55Z")
> [@Kimstu](#): > > Well, insuring more people intrinsically costs more than insuring fewer people. In costs to the insurer, yes. However, a system with more people in it allows better predictions of the costs of insurance over the pool than one with fewer people. Premiums for those in a small pool will have to be set higher in order to ensure that the insurer will lose money only a given percentage of the time. In the usual case they will probably make more money, but that is from increased risk. So, a larger pool might reduce premiums for those in it. Plus, we have to factor in the cost the insurance company is paying in higher medical fees to cover losses hospitals take on the presently uninsured. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 14, 2010, 10:30pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/33 "2010-06-14T22:30:42Z")
> [@RickJay](#): > > **Voyager:** I’m sorry; I am honestly trying to understand what you’re saying, and I just don’t get how it relates to what I’m saying. You’re talking about socializing inequity, or something. Sure, okay. I dunno what child labor has to do with anything I wrote. I’m not saying anything about whether or not the USA should have a universal health insurance system. I’m not disputing that this will cost them more money. I’m saying that the money it will cost them is money they are making by dumping reasonable costs of doing business on the public at large. Thus charging them this extra money is not causing inequity (to their stockholders) but restoring a level playing field. Isn’t it fair that WC customers pay the actual cost of producing a burger? Besides this. I don’t know how elastic the burger business is. Many fast food places did quite well in the recession. It is also possible that a small price increase, if it does lead to a drop in fast food purchases, will also reduce national health costs by encouraging eating at home, or eating less. That is social cost also. ---
**Author:** ![The\_Second\_Stone](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@The\_Second\_Stone](https://boards.straightdope.com/u/The_Second_Stone)\ **Post date:** [June 14, 2010, 11:44pm UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/34 "2010-06-14T23:44:19Z")
Hey, the converse is also true: low wage employers can double their profits by making their employees go without insurance. Profit. Wonderful stuff. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 15, 2010, 12:18am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/35 "2010-06-15T00:18:20Z")
> [@The\_Second\_Stone](#): > > Hey, the converse is also true: low wage employers can double their profits by making their employees go without insurance. Profit. Wonderful stuff. And have, due to market forces, for the most part. Look how Costco gets beat up in Wall Street for having the nerve to pay its employees decent wages and give them decent benefits. So long as most people reward companies who push health care costs onto the public at large, this is going to happen. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [June 15, 2010, 12:39am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/36 "2010-06-15T00:39:16Z")
> [@Voyager](#): > > And have, due to market forces, for the most part. Look how Costco gets beat up in Wall Street for having the nerve to pay its employees decent wages and give them decent benefits. Oh, nonsense. How do they get “Beat up”? By who? In what fashion? ---
**Author:** ![sleeping](https://avatars.discourse-cdn.com/v4/letter/s/839c29/32.png) [@sleeping](https://boards.straightdope.com/u/sleeping)\ **Post date:** [June 15, 2010, 12:50am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/37 "2010-06-15T00:50:07Z")
> [@RickJay](#): > > Oh, nonsense. How do they get “Beat up”? By who? In what fashion? From the [Wall Street Journal, March 26, 2004](http://online.wsj.com/article_email/SB108025917854365904-INjeoNplaV3oJ2pan2IbauIm4.html): > [@](#): > > Wal-Mart Stores Inc.'s parsimonious approach to employee compensation has made the world’s largest retailer a frequent target of labor unions and even Democratic presidential candidate John Kerry, who has accused the Bentonville, Ark., chain of failing to offer its employees affordable health-care coverage. > > In contrast, rival Costco Wholesale Corp. often is held up as a retailer that does it right, paying well and offering generous benefits. > > But Costco’s kind-hearted philosophy toward its 100,000 cashiers, shelf-stockers and other workers is drawing criticism from Wall Street. Some analysts and investors contend that the Issaquah, Wash., warehouse-club operator actually is too good to employees, with Costco shareholders suffering as a result. > > “From the perspective of investors, Costco’s benefits are overly generous,” says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. “Public companies need to care for shareholders first. Costco runs its business like it is a private company.” > … > “Their benefits are amazing, but shareholders get frustrated from a stock perspective,” says Emme Kozloff, a retail analyst at Sanford C. Bernstein LLC. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 15, 2010, 1:00am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/38 "2010-06-15T01:00:05Z")
> [@RickJay](#): > > Oh, nonsense. How do they get “Beat up”? By who? In what fashion? The Times article, quite some time ago, said that analysts following the company for various brokerages believed that Costco’s profitability could be improved by cutting labor costs by reducing benefits to the order of those paid by Sam’s Club. Hell, my company got beat up for not firing as many people as analysts thought should be fired. Analysts liking increased profits through lower labor costs is hardly surprising. I’m not even claiming that the analysts are wrong - just that anyone choosing to run a business based on providing more than the absolute minimum benefits is going to get flack from it, unless they are in a high margin business requiring the best and the brightest, like Google. ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [June 15, 2010, 1:04am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/39 "2010-06-15T01:04:21Z")
> [@Wall St. Journal](#): > > “From the perspective of investors, Costco’s benefits are overly generous,” says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. “Public companies need to care for shareholders first. Costco runs its business like it is a private company.” > … > “Their benefits are amazing, but shareholders get frustrated from a stock perspective,” says Emme Kozloff, a retail analyst at Sanford C. Bernstein LLC. So, from the _investor_ standpoint, they are too generous. What happens to the financial fortunes of a company who takes care of their employees first? Do they make less money? Are they somehow gonna go out of business? What happens if their _shareholders_ are frustrated? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 15, 2010, 1:08am UTC](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055/40 "2010-06-15T01:08:19Z")
> [@sleeping](#): > > From the [Wall Street Journal, March 26, 2004](http://online.wsj.com/article_email/SB108025917854365904-INjeoNplaV3oJ2pan2IbauIm4.html): Thanks. Exactly what I meant. [Previous page](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055.md?page=1) [Next page](https://boards.straightdope.com/t/white-castle-gross-cut-in-half-by-obamacare/543055.md?page=3)