How will new healthcare law affect the hospitality industry?
Starting on January 1, 2014 one of the provisions of the Patient Protection and Affordable Care Act will require companies with 50 or more full time employees not offering health insurance to those full time workers to pay a $2000 penalty for each uninsured employee (excluding the first 30). In Florida a Denny’s and Dairy Queen franchisee plans to add a 5% surcharge on all his bills to cover the cost of new health care law when this requirement goes into effect. The Huffington Post reports that surcharges are not without some precedent as all airlines are able to charge passengers a mandatory Sept 11th security few but also questions the fee’s effectiveness.
Still, consumers have many more restaurant options than airline choices, and Fronstin speculated that Metz’s move is more about politics than prices. Fronstin said that Metz and business owners, like coal company owner Robert Murray, who are blaming their extreme actions on Obamacare or on President Barack Obama himself may in fact be motivated by their own troubled business finances or political leanings.
Commentary Magazine also reports that several large restaurant companies (Applebees, Denny’s, Papa John’s, and Darden Restaurants) have already started discussing ways to respond to the costs associated with the new regulations, including reducing the number of hours employees can work per week to make them part time and avoid providing them with benefits.
The restaurant industry, already operating with razor thin margins, doesn’t have the ability to absorb tens of thousands more in healthcare expenditures without a considerable increase in sales. It’s a basic realty of economics: more has to be coming in than going out.
In Massachusetts, where there has been a health care mandate in effect for several years now, The Boston Globe wonders how the new federal health law, especially the $2000 fee per uncovered employee could affect business and restaurants here. The fee for uncovered workers under the Massachusetts system is currently $295 per person. Restaurants are among those with questions about what will happen in 2014.
Ron Stoloff offers health insurance to his 30 full-time employees at Blue Ribbon Barbecue Inc., which has restaurants in Arlington and West Newton. But during the summer, his payroll increases to as many as 80 workers, and he’s not sure if he will face steep federal penalties for not covering seasonal employees.
How do you feel about restaurants cutting employee hours to avoid healthcare penalties? Should restaurants offer all of their employees health insurance? Are you worried about how the new law will affect your bar or restaurant?