Industry on Clinton's health-care plan: the cure is worse than the illness - restaurant industry expresses opposition

WASHINGTON -- Refusing to swallow the health-care medicine the Clinton administration is preparing to administer, an unprecedented number of operators from across the country converged here to tell lawmakers, "We will only get sicker."

About 530 operators gathered in the nation's capital for the National Restaurant Association's Ninth Annual Political Affairs Conference in an effort to stave off more costly and onerous legislation.

That number is up 30 percent from last year's and represents 46 states, 15,000 units and about a half-million employees.

Still smarting from the recently passed Clinton Tax Package and its 50-percent meal-tax deduction, the group had one message for lawmakers as elements of Clinton's healthcare reform package were leaked to the public: "No more mandates."

"Health insurance for employees is plain good business, but the money simply isn't there," said Stephen F. Elmont, president of the National Restaurant Association and proprietor of Mirabelle in Boston.

Nevertheless, many law-makers -- including Secretary of Treasury Lloyd Bentsen -- continued to try to sell the package to the predominantly Republican crowd.

"In the restaurant business, you ought to be competing on taste," Bentsen said. "Not my steak is $1 less because we don't give employees health care."

Pointing out that the details known at the time of the conference were only part of a 290-plus-page working draft and not the final proposal, Bentsen assured the restaurants that the plan would ultimately cut administrative costs and outlaw certain insurance practices, such as cherry picking and redlining, that hurt small businesses.

"We're not interested in killing small business," Bentsen continued. "The high cost of health care is killing small business." He later noted that small businesses now pay one-third more for health care than do larger businesses.

According to details known at presstime, President Clinton's official health-care package is designed to give comprehensive benefits to the approximately 37 million Americans now uninsured and guarantee all Americans health-care security regardless of whether they are sick or unemployed.

The basis for the plan lies in forming regional health alliances that would promote competition by buying care from competing care givers and thus limit health-care costs.

The reform's financing is yet unclear, but employers are likely to pay a 7- to 9-percent payroll tax -- which the plan tactfully refers to as a premium -- to go toward 80 percent of the estimated $1,800 annual premium per person. Clinton has vowed to protect small businesses by phasing in their costs and offering government subsidies.

Because the foodservice industry is labor-intensive and dependent on both full-time and part-time employees, it is especially vulnerable to measures that further increase the cost of labor, according to the NRA.

"We do support health-care reform," said Mark Gorman, senior director of government affairs for the NRA. "But we want a voluntary system."

After listing several government-funded disasters like the communications satellite recently lost near Mars, Gorman said, "I'm pretty skeptical about it when the nurse says, |This isn't going to hurt."

A recent study funded by the Employment Policies Institute, a Washington D.C.-based research organization, estimated that about 828,000 foodservice jobs are at risk if the projected mandate is enforced. About 3.1 million low-skill and low-wage jobs will be lost nationwide, the study predicted.

But Jon Reiker, vice president of benefits for Orlando, Fla.-based General Mills Restaurants Inc., said it could be worse.

Reiker, whose company employs more than 110,000 people at its Red Lobster and Olive Garden chains, estimated that the payroll percentages necessary to fund universal coverage and cost containment are not 7 percent to 9 percent but actually 14 percent to 18 percent.

"If the mandate is overwhelming, then you either have to increase productivity, decrease wages or decrease the number of employees," he said.

"It's not a large-vs.-small business issue. It's a wage issue and a disincentive for growth."

He also noted that the plan has no mechanism to prevent abuse by overuse.

"We expect utilization to go through the ceiling," he said. "Especially when you bring in 37 people with no insurance."

Senate Minority leader Bob Dole, R-Kan., offered a philosophy more in line with the group's as well as a promise that Senate Republicans would block Clinton's health-care measure.

"I wish we'd do something in this town that wasn't a tax or a mandate on business," Dole lamented.

"This is just like mandated family leave. A lot of employers are saying, |Once I have 49 employees, I'm not going to hire that number 50.'"

The day the NRA conference ended, Dole and several Republican senators introduced a health-care plan with no employer mandates that are primarily funded by savings in Medicare and Medicaid.

Restaurateurs who blitzed Capitol hill found many legislators hesitant to commit to a position on reform but attentive to their health-care concerns. The plan is expected to meet major revamping.

Other issues tackled by the group included restoring meal deductibility to 80 percent and keeping the minimum wage at $4.25.

Foodservice operators compare the drop in meal deductibility to the luxury tax that decimated the boat industry in the late 1980s. They also argued that it is an unfair hit when most other business expenses are fully deductible.

Several congressional leaders said they would support measures to restore meal deductibility, according to state restaurant association representatives in their postlobbying reports.

"This is a 150-percent tax increase," said Rep. Neil Abercrombie, D-Hawaii. "No other industry had to take this kind of hit."

Abercrombie led the antireduction crusade in the House and will sponsor legislation to restore it.

The minimum wage -- which Labor Secretary Robert Reich wants to raise to $4.50 and index for inflation -- met a more lukewarm response.

While no increase is expected this year, the group was cautioned to stay alert.

Operators say an increase will cost the jobs of those it is intended primarily to help. According to the NRA, the increase to $4.25 in 1991 erased as many as 130,000 foodservice positions.

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