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Restaurant Industry Expresses Concern Over Health Care

By Fredric Koeppel
The Daily News
April 19, 2010

Few issues have divided Americans as completely as health care reform. Proponents believe that making medical care available to 32 million uninsured people will open a new era of social responsibility and fulfill the government’s covenant with its citizens, a sort of 21st Century New Deal.

Opponents see it as an unprecedented loss of personal freedom and an apocalypse of government interference that amounts to full-frontal socialism, if not totalitarianism, that is, a 21st Century New Deal.

The language of the heath care reform bill, passed by Congress on March 21 and signed by President Obama on March 23, may be bureaucratic and its provisions may be labyrinthine, but the basic idea is simple: Almost every citizen and legal resident of the United States (excluding American Indians) must purchase medical coverage for themselves and their dependents or risk what will eventually be hefty tax penalties, beginning in 2014. This insurance may be provided through employer programs or purchased through new “marketplace” sources.

Certainly so-called universal health care will be expensive, to the tune of $940 billion in the first 10 years. Who pays for it?

The wealthy can expect to pay more for Medicare, and insurance companies will pay an excise tax on employer-sponsored health plans that cost more than $10,200 a year for an individual or $27,500 for a family; this comes after 2018. Drug companies, health insurers and medical device manufacturers will also face new fees and taxes, as, in a fine point, will owners of indoor tanning services.

“Obviously, the legislation presents lots of challenges,” said Tim Finnell, a partner at Group Benefits LLC in Memphis. “Insurance premiums are going up, and they’re not going down. The good thing is that the law subsidizes low-income people by subsidizing tax credits. That begins in 2014.”

And then there are small businesses, defined by the government as a company that employs fewer than 100 people. According to the American Small Business League, 98 percent of the businesses in the U.S. employ fewer than 100 people, and 89 percent of those employ fewer than 20. Many restaurants fall into that category.

The Washington-based National Restaurant Association firmly opposed passage of the health care reform bill.

“We are extremely concerned that the health care bill will impose tremendous burdens on Americans’ restaurants,” said the group’s president and CEO, Dawn Sweeney.

“It will hurt our industry’s ability to create and sustain jobs.”

The restaurant (or food service) industry employs 12.7 million Americans in 945,000 food outlets, according to the National Restaurant Association.

Restaurant sales in 2010, estimates Restaurant Industry Forecast, will represent about 4 percent of the U.S. gross domestic profit, and food service employees will account for 9 percent of the nation’s work force. The National Restaurant Association counts 380,000 restaurant members.

Mike Miller, owner of Patrick’s Steaks and Spirits and president of the Memphis Restaurant Association, echoed Sweeney’s assessment.

“Everybody wants to do something for their employees,” he said, “but I can tell you that the way the bill was passed has restaurant owners shaking in their shoes. They’re terrified. I have under 50 employees, but if you have 90 or 100 employees, it’s going to cost $100,000 for coverage. Are you supposed to take a cut in pay? I’ve been talking to my accountants, and I think this will be devastating. The unintended consequence is that the law is a great incentive not to expand.”

What is everyone so terrified about?

Basically, small-business owners can look forward to these provisions (and thanks to businesspundit.com and csmonitor.com for the non-lawyerly explanations summarized here).

In 2010, businesses will receive a 35 percent tax credit if they have 10 or fewer employees earning less than $25,000 on average. The tax credit will be smaller if they employ 25 or fewer people with an average wage of $50,000 or less.

Starting in 2014, businesses could earn a 50 percent tax credit if they employ 10 or fewer people earning less than $25,000 on average.

If a business employs 50 or more people, it will be fined $750 per full-time employee if health insurance is not provided, though there won’t be a charge for the first 30 employees not covered, and there will be no penalty if fewer than 50 people are employed.

If health insurance is provided for employees, the business must cover no less than 72.5 percent of the cheapest health plan for individuals or 65 percent for families. Every employee must be enrolled, unless they choose not to be covered.

“I think there’s some general hysteria out there now,” said Finnell. “In terms of affecting businesses, we’re telling our clients that there’s not really a short-term effect. The provisions will probably add 2 to 4 percent to the cost of doing business, but not one will be forced to pay anything if they have 50 or fewer folks, but above that, yes, you will be paying more.”

Source:  http://www.memphisdailynews.com/editorial/Article.aspx?id=49374



 
 

 
 

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