Is This Obamacare Provision a Threat to Food Companies?
President Barack Obama’s healthcare reform has many small nuances. As one would expect, from the big to the small, every provision of Obamacare has been picked apart and analyzed since it was passed three years ago.
While the mandate that every single American must have health insurance coverage, despite any preexisting conditions, has galvanized the opposition to call for the repeal of the Patient Protection and Affordable Care Act, many large companies have problems with a much smaller change: the requirement that calorie information be added to all chain restaurant menus.
Some restaurants have taken preventative action, and already included that information on their menus. But there is no final regulation that requires calorie counts to be provided to customers. There is a reason for this three-plus-year delay; the lobbyist for many grocers — including Kroger (NYSE:KR) and Safeway (NYSE:SWY) — have called for Obama to curtail the provision that requires companies to display the calorie content in all their foods.
This has become a priority issue for the Food Marketing Institute, an Arlington, Virginia-based trade group. The group has said that the president should prevent the Food and Drug Administration from putting the new rules into effect, noting that he has already intervened with other provisions of the Affordable Care Act that carried unintended consequences. The Obama administration has decided to delay some portions of the 2010 healthcare reform law; it has temporarily retreated from restrictions on the coverage for executives and promised small businesses better choices of health plans.
In the case of the calorie information requirement, the unintended consequence are mainly related to logistics. Restaurant chains, like Domino’s Pizza (NYSE:DPZ), have complained about the cost of the new signage, while many grocers have said the diversity of their products would make such labeling an operational nightmare. Instead, the industry has backed legislation that would amend the requirement so that they apply only to stores with more than half their revenue derived from food prepared on site and allow the data to be provided online.
So far, movie theaters and bowling alleys have lobbied for an exemption.
The Food Marketing Institute has taken issue with the manner in which the provision was incorporated into the legislation as well. The calorie information requirement “was slipped into the ACA without debate and hearings,” Erik Lieberman, regulatory counsel for the institute, told Bloomberg last week. “There are options to minimize costs and to quantify the burden on industry.” He wants the White House Office of Management and Budget, which is “charged with reviewing these regulations” to put a “check on the FDA, and the president should make sure they do that.”
Margaret Hamburg, the FDA commissioner, informed lawmakers in April that the agency will try to issue a final rule this year, but it has since declined to give a potential schedule. “Implementation raises complex issues that FDA is working to address in a practical way that achieves the congressional objective of providing information consumers can use to choose healthy diets,” Michael Taylor, the FDA’s deputy commissioner for foods, wrote in an email to the publication.
Lieberman believes that the budget office should provide the administration with options that contain cost and quantify the burden on the industry. He said that the cost to the industry would amount to $1 billion in the first year.
As medical costs related to the obesity epidemic soared to approximately $147 billion in 2008, the healthcare bill sought to make nutritional information on food purchased outside of grocery stores more accessible. According to the advocacy group, National Consumers League, Americans spend about half of their food dollars on meals and snacks eaten outside the home. But the industry backlash contends that the legislation was not well designed. The industry-backed legislation that would amend this requirement was designed to “get some common sense menu provisions,” Republican Representative Cathy McMorris Rodgers, who sponsored the bill, told Bloomberg. “To display on menu boards the hundreds of pizza combinations is really impossible.”
For Domino’s, putting calorie counts on menu boards, which are frequently changed, would cost as much as $4,800 per year per store, Melissa Cummings, the secretary of the American Pizza Community, told the publication. “That’s 10 percent of profits,” she said.
But proponents of the legislation argue that including calorie counts should be seen as a cost of doing business. “People need information in order to make decisions and most consumers care about what they eat,” Jane Andrews, who manages nutrition and product labeling for Rochester, New York-based Wegmans Food Markets, told Bloomberg.
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