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The health care hot button

4 min read


In recent months, Restaurant SmartBrief readers have expressed an interest in the challenges presented by health care legislation. SmartBlog on Restaurants contributor Janet Forgrieve took a closer look at some of the health care issues the restaurant industry is currently facing.

Health care is a hot-button issue that’s getting hotter for restaurant owners, who are often squeezed between their desire to provide for their employees and the realities of high health-care premiums that make offering insurance prohibitive in such a low-margin industry. Currently, somewhere between 4 million and 6 million restaurant employees don’t have health insurance at any given time, according to UnitedHealthcare. The issue is in the spotlight at a time when many eateries are already stressed to the limit by the recession and trying to figure out how to wean guests off promotional pricing and get them back to paying pre-recession prices. Raising prices to cover the cost of employee health insurance just isn’t an option.

A recent survey of restaurant employees by a labor coalition revealed that many don’t go to the doctor when they’re sick because they can’t afford it and don’t have insurance. Potentially worse for business: two-thirds of food service workers surveyed said they’ve gone to work sick at least once during the past year, because if they don’t work, they don’t get paid.

Meanwhile, chains that do offer health insurance are worried that provisions in the new federal health care laws will take a much bigger bite out of their budgets. While the federal government has granted one-year waivers to health insurance companies that provide so-called “mini-med” policies for chains including McDonald’s, it’s not yet clear whether the laws aimed at providing more and better health care for Americans may actually squeeze more consumers  out, at least at the beginning.

In New York, a pending proposal to require all businesses, including restaurants, to give workers up to nine paid sick days each year has met with strong opposition from the business community and Mayor Michael Bloomberg, who says the proposal would be a commerce killer in a city where private-sector companies created about 10% of the new jobs created in the U.S. this year. “This is going down a path which is a terrible, terrible idea and would be disastrous to New York City,” Bloomberg told the New York Post. One estimate says the proposal would cost private sector businesses in the city about $800 million annually, and many worry that such a law would result in significant layoffs and force some small eateries out of business.

Even Starbucks, often held up as a poster child for providing for its employees, faces ongoing criticism from two sides – investors complain when the company spends more on health insurance than it does on coffee beans, while some employees and union organizers gripe that a requirement that staffers work a certain number of hours each quarter to maintain coverage excludes too many employees.

Some creative efforts to provide coverage to more workers are ongoing. Health insurance provider UnitedHealthcare partnered with the National Restaurant Association to launch a four-state test of a program designed to provide more affordable options for restaurants and restaurant workers. And, in Columbia, S.C., career bartender Will Green has taken action.  Green recently partnered with his local merchants’ association and a benefits provider to offer lower-premium, high deductible policies especially to restaurant workers. The policies aim to cover more of the industry’s workers until federally mandated insurance exchanges take over in 2014. “Hopefully [the insurance exchanges] will be a better method. This provides a nice stopgap sort of medium option,” Green told the Columbia Free Times.

Does your restaurant offer employee health insurance and/or paid sick days? How big a hit would your business take if you had to provide coverage?