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The Health Care Ruling—Moving Beyond Shock to Preparation

July 9, 2012 By: Emily Hanna Mayock

Though the U.S. Supreme Court’s ruling last week upholding most provisions of the Patient Protection and Affordable Care Act (PPACA) may have been a surprise to some, the backlash from many business operators—inside and outside the on-premise industry—was exactly as predicted.

Within an hour of the ruling, the National Restaurant Association had released a statement blasting the decision and calling for a congressional repeal.

“Today’s ruling by the Supreme Court is troubling for restaurant operators and business owners across the country,” NRA President and CEO Dawn Sweeney said in a statement. “We encourage Congress to continue efforts to repeal the law, since the Court’s decision leaves the employer requirements in place, provisions which impact restaurant operators’ ability to grow and create jobs.”

As part of the PPACA, employers of 50 or more full-time-equivalent employees will be required to offer full-time employees and their dependents an affordable health plan that meets a minimum value standard. This regulation begins in 2014. Business owners who do not comply will face a $2,000 fine per employee.

Operators’ and industry concerns are certainly valid. The industry is facing slow growth, and customer traffic and consumer spending actually are on the decline. Additional costs to operators—whether it’s through providing coverage or by paying fines—could be detrimental to already-struggling businesses.

“The [Affordable Care Act] imposes heavy mandates on employers using punitive penalties for noncompliance,” Rob Green, executive director of the National Council of Chain Restaurants told Nation’s Restaurant News. “The law will particularly damage the chain restaurant industry, which operates on thin margins and cannot support costly government-imposed mandates. Many chains have indicated they will have no choice but to cut back on workers’ hours or close restaurants in order to avoid penalties.”

Obviously, this is cause for concern. And many are apprehensive. So much so that they’re already planning to vote to repeal the entire act on the House of Representatives floor this week.

The NRA has voiced its support of the repeal (even before the vote was scheduled).

“This unworkable law cannot stand as is,” Sweeney said. “We need reform that addresses the increasing costs our members are faced with each year. Restaurant owners are looking for solutions that will allow them to provide better health care coverage options for their team members, but they cannot be saddled with excessive costs and regulatory burdens that threaten their very business. We ask members of Congress to take action that helps the restaurant industry continue to help create jobs and grow the national economy.”

For now, though, business owners are encouraged to move forward with plans for compliance with the law. The NRA, however begrudgingly, is providing its members with a series of webinars explaining the law, its effects and next steps. (The first can be found online; the second is scheduled for July 19 at 2 p.m.)

The association is also providing a series of blogs, written by its director of labor and workforce policy, explaining the law’s effect on the restaurant industry. And it even offers a space for operators to determine their responsibility for health care coverage, depending on their business size.

This preparation is crucial because, while many may disagree with the health care reform, the reality remains: It’s a law now, and it’s been upheld by the country’s highest court. Though the November elections could bring sweeping changes, they also may not—in which case, restaurants and bars need to get ready. From budgets to scheduling, there is much to prepare for by the time the law is fully enacted in 2014.

Of course, I could extoll the virtues of health care reform to you. But you all know it could end up providing you with more committed employees. You understand it would help your workers and their families personally. You get that it allows better preventive care as well as more coverage for adult children and those with pre-existing conditions.

You comprehend all of that. But you also understand your bottom lines—much better than I do. I’ve never run a business. I’ve never had to make the hard decisions when it comes to my employees’ livelihoods. You likely have.

So I’m not here to change your mind. I’m here to encourage you to get ready. Whether it’s analyzing options and outlines from the federal government or staying up to date through the National Restaurant Association’s health care knowledge center, it’s crucial to prepare for what could be coming down the pike.

When the law goes into effect in 2014, I want you to all be prepared—exactly as I predicted.


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