Regulation Nation: Health careRegulation Nation: Health care

In the opening address to the 2013 National Restaurant Association Public Affairs Conference, NRA president and chief executive Dawn Sweeney presented an unsettling assessment of what many operators have in store for them when the sweeping health care changes envelop the industry over the next few years.

Health care reform, she told the 600 restaurateurs and association officials attending the conference in Washington, presents “the most daunting, vexing challenge the industry has yet faced. There are 19,000 pages of regulations trying to explain the law, ... and few employers understand the law and its implications.”

This is part of a special report from Nation’s Restaurant News. See the full section >>

More on health care
• Case Study: Apple-Metro Inc.
• Timeline: Tracking health care reform
• Regulation Nation at NRN.com

It was not the last time attendees would hear health care mentioned during the two-day conference, either. Rep. Kevin McCarthy, R-Calif., predicted, “Obamacare will be one of the biggest issues [the country has ever faced].

“It’s not ready,” he declared. “It’s a train wreck waiting to happen.”

While restaurateurs had long voiced interest in offering employees affordable health care insurance, the Patient Protection and Affordable Care Act threw them a curveball when it was signed into law by President Barack Obama in March 2010. Even as the industry was just beginning to emerge from one of the most damaging recessions on record, larger operators suddenly found themselves facing stiff new costs stemming from the law’s complex employer mandate requirements.

Many operators held out hope that the law would be overturned, but after the U.S. Supreme Court upheld its constitutionality and the general election returned President Obama to the Oval Office, those hopes faded.

Now, nearly three years after it was passed, many in the industry say they are making headway in terms of implementing plans to accommodate the law. Nevertheless, the fact that the PPACA remains a work in progress presents even the most forward-thinking operators with challenges.

Questions remain unanswered

Continued from page 1

With only about eight months left until operators must start offering health care insurance, restaurateurs are wrestling with a number of unanswered questions.

“The biggest challenge is they’re still writing the rules,” Ralph Brennan, owner of the Ralph Brennan Restaurant Group in New Orleans, told Nation’s Restaurant News earlier. “We think we know where it’s headed, but we still don’t know what the final rules are going to be.”

Even those rules that already have been promulgated pose some pivotal questions. For instance, the law states that businesses with 50 or more full-time or full-time-equivalent workers must offer an “affordable” plan to all qualified employees and their dependents. Otherwise, operators will be subject to a nondeductible penalty of $2,000 per person annually — after the first 30 workers have been subtracted from the equation.

The law currently defines a full-time employee as one who works either 30 hours or more per week or 130 hours or more per month.

“The government has never defined a full-time worker this way in any other labor law,” said Scott DeFife, the NRA’s executive vice president, policy and government affairs. As a result, the industry is appealing to lawmakers to change that definition to employees who work 35 or even 40 hours or more per week.

Questions also remain about the “minimal essential coverage” component. The NRA’s Sweeney recently led a delegation to meet with William Corr, the deputy secretary of the Department of Health and Human Services, to discuss the law. Among those elements addressed was the “minimum value test,” which requires that an employer’s qualified health care plan cover at least 60 percent of an employee’s health care costs.

However, given that the health exchanges have yet to be set up by the states or federal government, a level of uncertainty remains as to what the plans eventually will cost, said Michelle Neblett, the NRA’s director of labor and workforce policy.

The NRA also is requesting that Congress eliminate the automatic enrollment requirement, which would require employers with more than 200 full-time-equivalent workers to automatically enroll workers in the company’s lowest-cost health plan unless the employee declines by a given time. The NRA maintains the requirement would be confusing and duplicative for both employers and employees.

And, perhaps more importantly, operators who are attempting to plan for the future say they have no way of knowing how many full-time employees — many of whom are young and might be covered under other policies — will opt to sign up for employer health plans and pay as much as 9.5 percent of their W-2 pay to participate.

As a result, many are expected to opt to pay the penalty: for the first year, $95 or 1 percent of household income, whichever is greater. That figure eventually will rise to $695 or 2.5 percent in 2016. After that, the penalty will rise by cost-of-living adjustment.

Contact Paul Frumkin at [email protected].
Follow him on Twitter: @NRNPaul