To Be or Not To Applebee’s? – Businesses Question Obamacare

It started with Papa John’s stating that Obama’s healthcare reform bill called the Affordable Care Act (ACA) would raise the prices of pizza by $0.11 to $0.14 cents. CEO, John Schnatter, stated that as a result the pizza chain would be forced to find ways to cut these new costs.

Then Darden Restaurants, the largest casual dining company in the world, threatened to cut employee hours. This would keep them part-time and avoid the increase in costs from the ACA. Darden Restaurants owns and operates Red Lobster, Olive Garden, and LongHorn Steakhouses and has over 185,000 employees nationwide.

Now, as recent as yesterday, Applebee’s became the latest restaurant firm threatening to halt hiring in light of the ACA. CEO, Zane Tankel has pointed to the high costs of healthcare reform suggesting that the new law will cost the franchise an extra $0.50 per sandwich.

Why So Many Restaurants?
Restaurants are prone for having hundreds of employees that work part-time. This becomes a key issue with healthcare reform because the ACA has an “employer mandate” which requires large businesses of more than 50 full-time employees to offer health care coverage to their employees. The ACA outlines that a full-time employee works 30 hours or more a week. However, the ACA also counts up a firm’s part-time employees and calculates their “full-time equivalence”. For example: three part-time employees working 10 hours a week count a one full-time employee. This change in calculating employees will impact thousands of businesses, if not more. Restaurants with more than 50 employees under the new definition now have a new burden to offer healthcare coverage despite the tough economy. If they do not, they will face penalties of up to $2,000 per employee per year.

Not So Ease
The type of coverage offered is also regulated. Some restaurants like McDonald’s provide “mini-med” plans that offer watered-down health insurance benefits to their employees. Under Obama’s bill, these plans are no longer constitutional. McDonald’s received a waiver from the White House which allowed them to continue offering these plans but that will soon change. In fact, by 2014 the only health care plans offered by large employers that qualify must cover a minimum of 60% of an average person’s yearly healthcare costs. If not, employers could face penalties as well.

Since the Supreme Court reaffirmed the ACA as the law everyone must have qualified health insurance coverage by 2014 regardless if they receive it from their employer. Coincidently, a recent 2011 survey found that 79% of the 48 million uninsured Americans have someone in their family working either full-time or part-time.

1 Man 1 Mind

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