Can Your Restaurant Afford Employee Health Insurance?
Health insurance is a critical component of any business, big or small. Employer-sponsored health insurance is a valuable tool for employee recruitment and retention and provides a sense of security as well as a safety net for workers if they should fall ill. One of the benefits of the ACA was that it provided an alternative way for employees of small businesses to buy inexpensive health insurance.
Even with the gains made by the Affordable Care Act (ACA), most small businesses are not able to afford quality healthcare insurance coverage for their employees. For many individuals in the restaurant industry, even if their employer offers health insurance, many do not enroll because the monthly premiums are still too high, or the coverage includes huge deductible. Despite the demonstrated need for affordable universal health care, the United States continues to lag behind every other industrial nation. Access to affordable health insurance is a complex issue, with no clear answer. The restaurant industry’s role in health care access is clear though; it needs to take a more active role in creating a system that is accessible for all restaurant workers, regardless if they work for a huge corporation or an independent establishment.
Restaurants and the Affordable Care Act
Roughly 4 percent of the GDP is generated by the restaurant industry.
But despite over 799 billion in sales, restaurants are not a high-profit business model. For every dollar earned in a restaurant, 71 cents goes right back out — in the form of wages, insurance, food cost, advertising, maintenance, the list goes on and on. Slim profit margins don’t leave a lot of room in the budget for what many consider to be non-essentials like paid sick time, retirement benefits, or health insurance.
Worker advocate groups like the Restaurants Opportunities Center point out that an industry as important and as large as the American Restaurants needs to take part in a solution for the current healthcare crisis. According to their website”… almost 9 out of 10 restaurant workers lack paid sick days (87.7 percent) and health insurance from their employer (89.7 percent). As a result of the fact that workers cannot afford to take care of themselves or stay home when they are sick, two-thirds of restaurant workers (63.6 percent) working sick, unnecessarily placing co-workers and diners at risk.” The issue of affordable health insurance and access to affordable care for restaurant workers is too big to continue to ignore.
The Affordable Care Act requires that all businesses with more than 50 employees offer some sort of health insurance plan. Many small and medium-sized restaurants are exempt because they have significantly smaller staff. For many restaurant owner and workers, the passage of the ACA was the first time they had access to affordable health care in their entire working career. ROC estimates that 10 million restaurant workers are now covered under the ACA or Medicaid. The ACA is not a perfect bill, but it was a good step toward making sure that all Americans have access to affordable care, not just those who work for large businesses and corporations.
Rather than rejecting federal intervention of health insurance regulations or other attempts to make health care more affordable, restaurant owners could start demanding affordable options from insurance companies. They could lobby Congress and their individual state representatives — not for less business regulations, but for more equitable options when it comes to healthcare. Restaurants are the embodiment of the American Dream — the opportunity to start your own business and build something from scratch. Health insurance should be considered part of our economic infrastructure, not as an entitlement program.
Even though the restaurant industry employs over 14 million individuals, it has a disproportioned amount of underinsured or uninsured workers. This in part is because the industry is made up of a wide range of business models, from franchise chains like McDonald's, to small independent restaurants with less than 10 employees.
The loudest voice from the restaurant industry is undoubtedly the National Restaurant Association (sometimes referred to as the other NRA) has been a vocal opponent of the ACA. Largely representing the interest of big chains over small businesses and individual employees, the NRA has done little to find real solutions for the healthcare crisis that affects restaurant workers in the United States — many of whom are women and immigrants. By continuing to marginalize their workforce, the restaurant industry will only perpetuate the problems that come with lack of affordable health care. Rather than try to hold back the tide of change and social progress, restaurant owners, both big and small, could unite to find solutions that work for everyone.
The Benefits of Restaurant Employee Health Insurance
With one of the highest turnover rates of any industry, the cost of poor working conditions will continue to have a negative impact on restaurants. After all, owners can’t expect to retain good talent without providing some sort of safety net. One of the most obvious benefits of offering employee health insurance is that workers have access to preventative care. That persistent cough won’t turn into pneumonia; that strange lump can be checked for cancer, high blood pressure can be treated before it causes a heart attack or worse. Because the restaurant industry is staffed by some of the nation’s most marginalized and vulnerable population, health insurance access has been largely ignored and undervalued. Organizations like the NRA press for less regulations, but offer little suggestion for how to make health insurance affordable for all workers.
Perhaps it’s time to change the way restaurant owners think of health insurance. What if instead of seeing health insurance as an option, more restaurant owners built the cost of insurance into their business plan, alongside unemployment insurance, licensing fees and other requirements? What if restaurant owners stopped viewing insurance access as an entitlement program and instead as a necessary part of their economic infrastructure? Healthy employees are more productive and have less turnover. This means a restaurant that can offer top notch customer satisfaction, which in turns increases profits. It’s estimated that three out of four restaurants close within the first three years. High turnover in a new business contributes to this factor. It’s hard enough to establish a good reputation in those early years, without having to worry about hiring and training staff on a regular basis. Providing a benefit like health insurance or advocating for a federal insurance plan for all workers, means less things a new employer need worry about.
The Restaurant Wage Problem
$45,000 annual salary is considered the tipping point for most American’s to purchase health insurance. If they make less than that, they don’t buy coverage because it consumes too much of their household budget. Considering that the average server in the United States makes $8.90 an hour, it’s not surprising that even when they are offered employer-sponsored health insurance, they don’t take advantage of it. The problem with the current mandated system established by the ACA is that employers have to offer some sort of plan. And the plans that they can afford are high deductibles, meaning low wage workers could still not afford to visit a physician when they are sick. It is a model where no one wins.
Trump Health Care and Restaurants
The proposed changes to the ACA by the Trump administration do little to help the restaurant industry and its workers. It rolls back the requirement for small to medium-sized businesses to provide insurance, which may be a good thing since most options are catastrophic, high deductible plans that are still too expensive for most restaurant employees. So for restaurant owners, the roll back on regulations is at best, a temporary relief from a much bigger problem. It still does not address the bigger issue of affordable access to health insurance for millions of low-wage workers in the United States. The new GOP healthcare bill does nothing to regulate insurance prices or provide more coverage for the most vulnerable population.
The Cost of No Insurance
How much does the uninsured cost America? Restaurant workers are among the hardest working people in the United States. They work long hours in less than stellar conditions for little pay. Often the only legal work that newly arrived immigrants can obtain is in the restaurant industry (quote from NRA). Depending on the state, restaurant workers may qualify for Medicaid or other state-sponsored health coverage — pushing the cost of care onto the tax payer. Yet, CEOs of companies like McDonald's make millions of dollars. If all the restaurants in the US banded together to leverage their buying power, maybe they could find a solution. Taxpayers are increasingly tired of supplementing big businesses health care costs. When business giants like Wal-Mart and McDonalds pay a pittance and refuse to offer affordable health care options while paying out millions to their CEO and shareholders, and their employees get sick, it is the American taxpayer who pays — in the form of Medicaid, charity care and chronic disease management that could have been prevented.
As long as corporate interests are in control of the conversation about American health care, it will be focused on reducing business regulations, rather than including affordable access to health care as a necessary part of this country’s economic infrastructure. Small and medium restaurant owners need to start demanding better options for themselves and their employees. Imagine hiring a top chef and being able to offer him or her competitive health insurance? Imagine your staff has the security of visiting the doctor’s office, knowing it won’t cost them all of their savings? How would that change the work environment? What would that look like at your restaurant?