By Kim Kalunian, WPRO News
Local business owners, particularly restaurateurs, are scrambling to determine what they need to do to comply with the Affordable Care Act – or Obamacare – before many of its major provisions take effect on Jan. 1.
Supporters said the act is designed to ensure all Americans have access to quality, affordable healthcare, but the details of the implementation process remain fuzzy for restaurants and other businesses in Southern New England, though that may change soon.
“It is still uncertain what impact the newly proposed health care laws will have on restaurateurs and the industry as a whole,” said Dale Venturini, the President and CEO of the Rhode Island Hospitality Association. “It is, however, causing confusion for many business owners who have put expansion plans and changes on hold for fear of taking on more debt before they can fully understand the ramifications it will have on their businesses.”
“Once more information is available we will be able to understand better what the future will hold,” she said.
Venturini’s comments provide a pretty complete summation of the problem facing local restaurant owners: they’re nervous about the economic impacts of the healthcare mandates, but they’re also wholly unclear about what many of the those mandates are.
In its current form, the ACA requires businesses that employ 50 or more workers to provide health insurance to all full-time employees. Congressman Jim Langevin, who voted for the law, acknowledged that provision in particular is causing concern.
“Obamacare was designed to exempt over 96 percent of businesses from the employer responsibility requirements; however, that has proved little consolation to many Rhode Island small business owners I have heard from who are attempting to make sense of the new law,” Langevin told WPRO in a statement.
“The [Obama] Administration has offered proposed guidance regarding part-time and seasonal workers, but we are still awaiting final rules to provide the clarity small businesses need to plan ahead,” Langevin said.
Planning ahead is just what Bob Bacon, the owner of Gregg’s Restaurants, wants to do. His Rhode Island chain employs more than 400 people at its four restaurants and corporate offices.
Bacon said Gregg’s provides healthcare to all of its managers and full-time staff members, but he’s concerned that his employees have misconceptions about the impacts of the ACA.
“My biggest concern about this is that I think that the expectations of many of my employees have been falsely raised,” he said.
Aside from that, Bacon, like many others, says he’s facing a major lack of information; on many fronts, employers and individuals are still guessing about how the new rules will impact them.
For example, Bacon said his insurance coverage meets the guidelines of “qualified” and “affordable,” but in order to stay within the spending limits of ACA, Bacon may have to actually decrease his employees’ benefits.
“From my perspective it’s very foggy, and it has not been totally determined yet,” he said.
Bacon’s advice: “Everybody [should] stay calm and wait and don’t overreact to information. You get a lot of misinformation… [It’ll] get worse before it gets better.”
Another provision of the ACA creates new health insurance exchanges for states, or online marketplaces where individuals can buy coverage. The exchanges, including Rhode Island’s, are scheduled to start enrolling people on Oct. 1.
According to Ian Lang, the director of marketing and communications for Rhode Island’s exchange, information will be available to small business owners starting next month.
“The answer to the question is, ‘Coming out but not yet available,’” Lang said, adding that the Health Insurance Commissioner is expected to release rates for insurance sold on the exchange by early summer.
Open enrollment for individuals and businesses will begin in October and continue through March, with coverage beginning in January. Lang said the exchange will begin “extensive outreach” in late June to educate Rhode Islanders about how it works.
But until then, employers must wait and wonder how the ACA will impact their businesses.
âChris Tarro co-owns Siena Restaurant Group with his brother, Anthony, Siena has two locations in East Greenwich and Providence, and they plan to open another Siena in Smithfield.
“Obamacare calls for us to offer central coverage for employees, yet the government hasn’t told us what that is,” Tarro told WPRO.
Tarro said he’s concerned about the law’s impact on his own business, but also on the hospitality industry in general.
“Obviously we are in an industry where there are small [profit] margins and lots of employees, and when you start mandating something like [affordable health insurance] it significantly impacts the bottom line,” he said.
Currently, only managers receive healthcare from Siena. Tarro said he would love to offer all of his employees health insurance, but he knows it would put a strain on his business.
Tarro fears that mandating affordable health insurance for all full-time employees could force him and other restaurateurs to cut back on workers’ hours, making them part-time employees and therefore ineligible for coverage. For now, though, Tarro said he and his brother have no plans to go down that road.
A challenge for restaurateurs like Tarro and Bacon is that although each restaurant is a separate entity, they all fall under the same ownership. Combined, the restaurants have more than 50 employees, but separately, they function as small, independent businesses, they said.
“Most of my competition is smaller independent restaurants that aren’t going to have to do this,” said Tarro, who said he is going to have to find ways to cut costs in order to maintain Siena’s competitive edge.
Tarro’s restaurants currently have 85 employees, a number that will grow to 130 when the new Smithfield location opens. He wonders if other small business owners will be dissuaded from expansion under the new regulations.
“If I only had 40 employees, would I grow?” he asked.
It’s one of the dozens of questions Tarro said he hopes to get answered. Another major source of confusion is determining what “affordable healthcare” really means for his employees. As he puts it, what might be affordable for a manager might not be considered affordable for wait staff, which could mean different employees would be paying different premiums for various coverage plans.
Lang said employers will be able to decide what part of a premium they’ll be able to pay on an aggregate basis, and employees can then buy up or down from there. This, he said, will cut down on administrative headaches for employers, while giving employees a “complete choice.”
Still, Tarro says a “low estimate” of how much the implementation of the ACA could cost him is between $160,000 and $200,000 a year.
“When you think about that for two brothers that own three restaurants, it’s a monumental amount of money,” he said.
Tarro said he understands that the healthcare system needs to change, and more people need to be insured, but he isn’t sold on the new rules for small business owners.
“We don’t want to be thinking about not hiring people,” he said.
Despite the confusion and concern, Democrats in Washington still support of the ACA, including Congressman David Cicilline.
“The Affordable Care Act is already providing significant benefits for Rhode Island, and Congressman Cicilline is fighting to ensure that it is implemented in a way that best serves our state going forward,” said Cicilline’s spokesman, Richard Luchette.
Cicilline “has spoken regularly with small business owners who have concerns about how the law will affect them, and Congressman Cicilline will continue working with officials at the federal, state and local levels of government to ensure that this law works for Rhode Islanders,” Luchette said.
Langevin says Republicans are looking to repeal the ACA, but he’s not willing to go down that road.
“[My focus] will remain on its effective implementation by continuing to engage with all stakeholders, including Rhode Island businesses, to ensure their concerns are properly addressed,” he said.
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Kim Kalunian
