Restaurant Chains Prepare for ‘Employer Responsibility’ Provisions for Health Care Reform

blog-nashuateleNASHUA – Whether they are in favor of Obamacare, local restaurant owners agree they’re eager for more details about how the controversial law will affect their businesses.

Tom Boucher, owner the T-BONES Great American Eatery locales and CEO-owner of Great New Hampshire Restaurants Inc., went to Washington, D.C. earlier this month to testify before a congressional subcommittee working to define the law, which was passed in 2010. Boucher testified on behalf of the National Restaurant Association – the “other” NRA – and said restaurant owners thrive on planning ahead and the clock is ticking.

“The way the law is written right now, there’s still a lot of uncertainty on some of the rules,” Boucher said in an interview. “This law starts nine months from now. … I’m not even sure what that is going to cost us.”

The law’s latest provisions, slated to go into effect Jan. 1, 2014, will mandate all businesses with 50 or more full-time employees, or the equivalent of 50 full-time employees, to provide health insurance to their full-time staff, defined as employees working more than 30 hours a week.

Business owners nationwide have yet to be informed entirely of what that mandate will look like and what services will be offered as Congress continues to iron out the details.

The NRA says the restaurant industry comprises 13.1 million people and has previously taken the stance that the law is bad for business. In an already complex industry, with transient workers, seasonal staff and minimal profit margins, they say restaurants won’t be able to afford the measures.

Mike Somers, president and CEO of the New Hampshire Lodging and Restaurant Association, said he has been hearing concerns from local establishments, but he has few answers to give them.

“Talk to some health insurers. They won’t even be able to tell you what a rate would be for individual employers because there are so many unknowns in the entire calculation,” he said.

Boucher told the U.S. House’s Energy and Commerce Committee’s Subcommittee on Health that more than anything, restaurant managers like himself need a heads-up before January. In his testimony, he said even calculating whether a business qualifies as having 50 full-time equivalent employees is a complicated process.

Boucher estimated the health care costs for his business will go up 40 percent, based on his own independent research he says, which would tack an additional $200,000 onto his yearly budget for his restaurants, in Hudson, Bedford, Derry, Laconia, Manchester and Salem.

Boucher said he has already expended a great amount of time with his human resources department, complying with parts of the law already in place, like redefining of full time to mean working 30 hours rather than the industry standard of 37 to 40 hours a week. He said other businesses aren’t as fortunate as his to employ an HR department to work through the numerous steps.

“Since the law was enacted in 2010, we have been taking steps to educate ourselves about the requirement of the law,” he told the subcommittee in mid-March, “(but) understanding our compliance requirements has been time consuming and burdensome”

Michael Buckley, owner of MT’s Local and SURF in Nashua and Buckley’s Great Steaks in Merrimack, said he believes the act has been “poorly thought out.” From his perspective, he thinks the mandate – known as the employer shared responsibility provision – will hurt his businesses and employees.

“There’s a lot of small businesses out there that will be affected by this and a lot of them won’t be able to afford it,” he said. “I think overall, it will be a negative thing for the business community.”

Lisa Kaplan Howe, policy director of the New Hampshire Voices for Health advocacy group, said her group is working to educate business owners about the changes to come. She denied some of the state Lodging and Restaurant Association’s claims, including that the reforms will apply to seasonal workers and an automatic enrollment procedure will result in “double-dipping” by some younger restaurant employees who won’t realize they are still covered by their parents’ plans until the age of 26. Kaplan Howe said the automatic enrollment feature is no longer included in the mandate.

“The insurance reforms that will go into effect in 2014 – right now, people with preexisting health conditions can be denied. That will no longer be possible,” she said. “There really are a number of provisions that will come together to make health care more affordable and more accessible.”

Don Brueggemann, manager of the Concord Works Cafe/Bagel Works establishment, said his chain of seven restaurants has subsidized employee health care for the past 18 years. He admits to being fairly progressive, and served as a former state representative, but he believes all his employees should be covered.

“We’re generally supportive of the changes,” he said. “(But) you do need to give people time to prepare for it.”

In conclusion to his congressional testimony, Boucher told the Subcommittee on Health that the threat of heavy penalties and fines for businesses who do not comply with the latest provisions may lead to some opting out of the program altogether, for fear of “not getting this exactly right the first time,” he said.

“This is not what the restaurant and food service industry wants, but it may be a likely result of employers having to make difficult decisions under extremely uncertain conditions,” he said.

Brueggemann said from his perspective, if his company can be made aware of changes in advance of their final quarter of the year, around October when they start to piece together the budget, that’s good enough for him.

“Presumably, by the time we are budgeting for that, the rules will be clearer and we’ll have a better sense of what it will cost us,” he said. “We’ll all be in trouble if they haven’t come up with the rules by then.”

 

By Samantha Allen, Staff Writer, Nashua Telegraph