| Operators seek cure for insurance ills Pols, restaurateurs prescribe ways to make health care more affordable
By ELISSA
ELAN
(Oct.
13,
2008)
As the price of health insurance skyrockets, foodservice operators say the system needs a prescription to lower costs so valued employees won’t leave their jobs for other industries better able to provide benefits.  | | Sen. Thomas Carper, D-Del., center, met with delegates from Delaware at the National Restaurant Association’s Public Affairs Conference to discuss, among other issues, health care legislation. |
But restaurateurs already struggling to keep pace with increased food and labor costs are finding that affordable health care is little more these days than a cruel oxymoron. “What we hear from our members is that they cannot afford to provide health insurance, and that could cost the industry jobs,” says Bob DeZinno, president and chief executive of the Connecticut Restaurant Association. “We realize we are an underinsured industry from the health insurance industry perspective. But the business reality of it is that with tighter profit margins, especially now with the way the economy is, it’s just something we can’t offer across the board. “It’s almost like those operators who want to provide that benefit can barely compete against the operators who choose not to—a ‘Catch 22.’ But in order for us to really become the ‘industry of choice,’ these benefits will have to be offered.” Richard Dorchak, owner of the Cloverleaf Tavern in Caldwell, N.J., says the restaurant business in his state is experiencing its worst fiscal performance in more than 30 years and restaurateurs can’t afford to shoulder the additional cost of health insurance without passing it on to the customer, which is not an option during tough economic times. But he agrees that not providing benefits to employees could at some point lead to their exodus from the industry. “Younger people think they’re bullet-proof,” he says. “But once they get out of college, they’re looking for insurance, and we can’t afford to give it to them. Maybe if the cost was reasonable we could pass it on to them and not have them leave us for another job that does offer it.” Expanding health care access to residents has become a priority in most states. Massachusetts, Maine and Vermont already have passed universal-health-care legislation, while Hawaii mandates coverage for children under the age of 19. Meanwhile, the issue is expected to come up again next year in Washington state, Connecticut, California, New Jersey, Wisconsin, New Mexico and possibly Maryland, says National Restaurant Association spokeswoman Maureen Ryan. “The restaurant industry certainly cares about its employees, and many [operators] wish they had the resources to provide health care,” she says. “But laws and regulations that ignore the fundamental problem with a broken system do nothing to better the situation.”  | | Dick Grotton chief executive & president, Maine Restaurant Association |
Earlier this month in San Francisco, a three-judge panel of the 9th U.S. Circuit Court of Appeals upheld the city’s employer-subsidized health care program, saying it does not violate state and federal laws regulating employee benefit plans. The ruling overturned a lower-court decision that claimed the program, called Healthy San Francisco, placed an undue burden on small businesses in the city. The plan was challenged by the Golden Gate Restaurant Association, which said the mandatory employer fees violated the federal Employee Retirement Income Security Act, also known as ERISA. The group reportedly plans to appeal the ruling. A number of existing universal-health-care programs, in fact, are not without their problems. Take, for example, Maine’s Dirigo Choice, a statewide program offering subsidized health care to individuals and businesses with fewer than 50 employees. Established in 2005 by Gov. John Baldacci, the program, which entitles residents to unlimited preventive care, is funded by taxes imposed on insurance companies. However, some critics, including Maine Restaurant Association chief executive and president Dick Grotton, call the plan a failure. “We are plagued by a number of things that don’t help us at all,” he says of the plan. “We’re a small population, and the state mandates that we have to provide a hospital within 30 miles of a densely populated area. We have around 39 hospitals in the state, and because there are so many, there are no curbs on the cost.” The program, which offers coverage for $400 a month with a deductible of $2,500, or $700 a month with a deductible of $1,000, has an enrollment of only 12,000 residents, despite a promise by Baldacci that the state would insure 136,000 uninsured Mainers by 2009. In addition, the program borrowed $20 million this year from the state’s general fund, to be paid back with interest, because of liquidity issues. Furthermore, Dirigo Choice is in the process of changing its name and carrier and has suspended enrollment of new members due to the lack of funding, said a spokeswoman for the governor. “The program is still active, but it’s closed to new members at this time,” she says. “There are a lot of things in play, a number of financial issues and a question on the ballot concerning the problems with the way the program is funded.” Part of that funding derives from a “sin tax” on beverages like beer, wine, soda and some flavored drinks that some believe contribute to the growing obesity problem. The tax adds an additional 11 cents to the price of a liter of soda, 16 cents to a six-pack and 7 cents to a bottle of wine. Grotton, who calls Dirigo “an insurmountable and fiscal failure,” says the tax is yet another drain on both consumers and restaurant operators.  | | Mass. Gov. Deval Patrick recently called for an increase in the contributions employers pay to the state’s universal-health-care plan to make up for a $100 million shortfall in funds needed to cover the uninsured. |
In Massachusetts, where universal health coverage was implemented in 2007, the soaring costs of providing insurance to all residents has forced Gov. Deval Patrick to tighten employer contributions that require businesses with 10 or more full-time employees to have 25 percent of those workers enrolled in company insurance plans and pay one-third of the costs as well. If employers do not meet both tests, they must pay a $295 assessment fee for each employee, including part-time workers. So what is the reason for the increase in employer contributions? Patrick reportedly needs to generate $100 million in new revenue to pay for increased costs associated with subsidizing coverage for the uninsured. But even with the employer contributions, some restaurateurs say, the premiums still are so high employees are looking for ways to work fewer hours so they can be subsidized by the state. “We offer health insurance to all of our full-time employees; they pay half and we pay half,” says Shun Chen, proprietor of the Asian C restaurant in Hingham, Mass. “The cost is $400 per person per month; we pay $200. But some people have decided to work fewer hours so they can qualify for the state-assisted health insurance. People with low incomes can purchase their insurance from the state. Financially, it’s cheaper.” Chen, who owns two other restaurants, says his labor costs have increased $15,000 this year at Asian C alone because of universal health care. “It’s so hard,” he says. “The economy isn’t stable, and we can’t raise prices because that won’t help business at all.” When it comes to health care affordability, however, an Alabama state law-maker has crafted one of the more unique approaches. If elected to the U.S. Congress, he says he will duplicate at the federal level a health plan he helped to pass at the state level. Jay Love, a veteran of the Alabama House of Representatives, is running on the Republican ticket for the state’s 2nd Congressional District. For three of his six years in the state House, Love argued for a health care affordability plan that allows small-business owners and their employees to deduct from their state taxes 150 percent of their annual expenditures on health care insurance. The plan covers all businesses that employ fewer than 25 people. It allows employers who provide group health care plans or employees who work for small business without such coverage and who must buy it individually, to take the 150-percent deduction. | 
