Obamacare delays lessen impact on restaurant operators

Feb. 21, 2014 | by Alicia Kelso
Obamacare delays lessen impact on restaurant operators

In regards to the Affordable Care Act and its influence on the restaurant industry, you could say that now is the calm before the storm. A Congressional vote is expected "very soon" on a major facet of the law — the definition of "full-time employee."

Scott DeFife, the National Restaurant Association's EVP of Policy and Government Affairs, said the association's top priority is to get the definition changed from the way the law is written now — 30 hours — to 40 hours.

"We are close to a vote in the House of Representatives, where we have over 200 co-sponsors and the support of Republicans and some Democrats to change the definition from 30 to 40 hours," he said. The NRA is one of many organizations that has been pushing for the change. DeFife said "30 hours" was included in the original bill for mathematical reasons more than policy.

"The way the legislation was moving in 2010, 30 hours was chosen because of the cost estimate, not because everyone thought it was full time," he explained. "The budget math was better with 30 hours."

DeFife said the economics are difficult, and the debate can fall on both sides: On one side, defining full-time as 40 hours is more cost effective for operators who would have to pay more for more coverage with 30-hour full-time employees. On the other hand, the budget math was favorable under the 30-hour definition.

The case the NRA has presented, however, is a sort of compromise.

"Advocates pushing for this law want people to have health insurance, not to set a new full-time-hour definition. That is not a central tenant of the law," DeFife said. "People can get health insurance from exchanges, from their employer or from their family. The law is in conflict with itself. With the theory of exchanges, they want to put young, healthy people into exchanges so they have a large enough pool so rates can come down."

But under a "40-hour" full-time definition, more employees would instead be covered by employers.

"If you move the (hour) number up (to 40), you're helping the exchanges by increasing the number of young, part-time, seasonal people who might go to an exchange and get a policy they can afford," DeFife said.

Variable hours

Also at issue is the variable nature of the restaurant industry. Rarely is a set 40-hour work week practical.

"You take the shifts as they come; you do what you need to do to meet that demand. Sometimes that's 30 hours, sometimes it's 36 hours or 40 hours," DeFife said. "Operators want us to work for this new (30-hour) definition. Thirty hours is not a number anyone has had to work with or worry about before."

(More information about the NRA's position on the FTE requirements is available here).

As currently written, there is one part of Obamacare that works well with a majority of the restaurant industry's worker demographics — the ability to stay on a family plan until age 26 (prior, it was age 21).

"That particular provision is of benefit to the industry because we have a lot of young people working part time, going to school," DeFife said.

The delay(s)

Since Obamacare passed in 2010, and upheld by the Supreme Court in 2012, the Administration has issued two delays. One came in July, and focused on businesses reporting their coverage. The second came earlier this month, and extended the compliance deadline for mid-sized companies.

DeFife said the NRA was "pleasantly surprised" by some of the details from the most recent announcement. These delays help the restaurant industry by:

  1. Giving operators more time to comply. "A year ago, people weren't ready to implement this law and the government wasn't ready to administer it," DeFife said. "People are still getting educated about the obligations."
  2. Providing a clearer picture of who needs to be insured. "It would have made more sense to rollout the individual mandate and then the employer mandate. You want to see how people are reacting to the obligation of having health insurance," DeFife said. "The delay is helping to shake out what slice of the workforce is going to look to the employer to get a health care plan. The smaller the group, the more affordable, potentially, it is for the operator. And they'll have a better idea of who they're going to insure. Delays are going to help people find more affordable solutions and lessen the long-term impact on the operator."

Menu labeling

Although there is no set date for the final regulations regarding menu labeling, DeFife expects them to come this year. "My understanding is they're nearly complete," he said.

For operators who are close to doing a menu changeover, he suggests holding off a month or two. And for chains that will need to comply with the menu labeling requirement, if you haven't already thought about a nutritional analysis partner, "you might want to," he said.

Once the regulations come out, the NRA will provide a full explanation, as well as educational sessions on how they can be implemented.

Panic subsides a bit

DeFife echoed the observation that restaurant company executives seem a bit less panicked about implementing Obamacare than they were two to three years ago.

"But, there is still a strong sense of urgency. There is always fear of the unknown," he said. "The more people start to understand and the more the regulations shake out, things will calm down. The more time you have to comply, the better off you are."

Photo provided by Wikipedia.

Topics: National Restaurant Association, Operations Management

Alicia Kelso
Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine. View Alicia Kelso's profile on LinkedIn

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