Why is it so difficult for restaurants in Philadelphia to offer health insurance?

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When Sarah Myers was diagnosed with ovarian cancer in March 2021 after working in the restaurant industry for more than a decade, they wondered if the disease would force them to change careers.

“There was a part where I was like, ‘Okay, maybe it’s time for me to go into the nonprofit sector,'” Myers says. “I used to work in restaurants, then I also worked in a non-profit organization to try to put together my CV. But I also realized: I don’t want to do anything else. I love working in the restaurant industry. That’s why I do it. I just needed to figure out what my workaround was.

In October of that year, Myers accepted a job at the Middle Child Clubhouse in Fishtown. At first, their health care was covered by Medicaid, which they had been using since before their diagnosis. But when the opportunity arose to take on the position of restaurant service manager — a job that would come with more money and responsibility — Myers feared the rise in income would affect his Medicaid eligibility, potentially increasing his healthcare costs significantly and even reversing the salary increase.

Myers is one of less than 50 Middle Child employees. Under the Affordable Care Act, Middle Child owner Matt Cahn is not mandated to offer health insurance to a business of this size. Even so, Cahn says, he spent an inordinate amount of time researching insurance plans. The labyrinthine systems of the healthcare world have become a bit of an obsession for Cahn, who is somewhat obsessively prone to begin with.

“If I have to put that level of attention to detail into building a Shopsin club and figuring out how to brine and roast a turkey breast, why wouldn’t I do the same with something that actually affects people’s lives?” Cahn said. “At the end of the day, sandwiches are fucking sandwiches, and it doesn’t matter. But people’s livelihoods – it does matter.

It’s no secret that health insurance has never been available to most small independent restaurant workers. According to a 2019 Restaurant Success Report published by popular restaurant technology platform Toast, 31% of restaurants surveyed offered medical insurance. (Cahn says none of his former restaurant jobs included health insurance.) In these settings, low margins and high employee turnover make offering benefits expensive and complicated.

This dearth of insurance options for restaurant workers, Myers says, has created a kind of secondary network of health care options. “Staff members, especially those who have been doing it for a really long time, have their workarounds when they didn’t have health insurance,” Myers says. “They’ll be like, ‘Oh, I know this clinic that does, like, free teeth cleanings every Monday. We have all this little information because of the inaccessibility of our health care for so many years.

Besides the workarounds, the general inaccessibility of health care coverage for restaurant workers contributes to staff turnover – which is one of the factors that makes offering benefits so difficult for owners. in the first place.

“I see the lack of benefits as a barrier to growing our industry and solving the staffing problem,” says Maria Campbell, founder of Cooks Who Care, a Community Foundation program. Campbell founded the organization in 2017 in response to what she sees as a mental health crisis in the industry. Much of his work at Cooks Who Care focuses on developing more robust health insurance options for restaurants to make the industry more attractive to workers of all backgrounds.

One of Campbell’s goals is to create a fund that offers micro-grants to help offset all sorts of health care costs for workers in the industry. These payments, which Campbell says could be as high as $300, would help pay for things like a prescription that isn’t covered whether or not a person has health insurance. Campbell’s hope is that people will be able to request money for everything from a one-time visit to the doctor to ongoing appointments with a therapist, or even for emergency care.

Micro-grants would be particularly helpful in addressing the needs of undocumented workers, who represent a large but difficult to measure percentage of employees across the country and are not eligible for insurance, regardless of income or position. . Until this policy changes, Campbell’s off-the-beaten-track relief (and other similar alternatives) will remain essential.

As Cahn prepared to open Middle Child, he found his own ready-made approach for his employees. “Technically, we don’t offer health insurance,” he explains. “I know it doesn’t sound good at first, but I’m not interested in, like, pretending to be like, ‘Oh, we’re giving benefits, we’re giving benefits’, but it’s actually not good coverage and it’s super expensive for everyone involved.”

It was important for him to create as much stability as possible for the team. What Middle Child offers is support in accessing insurance. Each employee can use a private website created by a company called Domenick Financial, an independent insurance broker run by Matthew Domenick. The webpage details Middle Child’s offerings as well as contact information for Domenick and his team, who act as benefits consultants and state exchange liaisons. If an employee is not eligible for a minimum 25% subsidy (due to income) through the exchange, Middle Child provides a taxable allowance to cover the difference.

During the planning phases of his health insurance search, Cahn surveyed staff and found that most people were either not interested in health insurance or said they would opt for lower cost plans and with a higher deductible. Going forward with this option meant that someone who needed to go to the hospital for a broken arm or stitches could still have to pay several thousand dollars.

To protect its staff from potentially high medical bills for these types of emergencies, Cahn pays about $17 per month per employee to enroll each team member in an emergency plan through an insurance provider. third party, which essentially offers catastrophic care – think emergency visits, intensive care admissions, certain types of surgery and stitches.

Cahn considered offering a group health care plan — the most common option for large corporations — that gives employees up to three options to choose from, all usually from the same insurance company (think UnitedHealthcare or Independence Blue Cross). He also learned about health insurance start-ups – services intended to offer primary care at a lower cost, without covering emergencies or chronic illnesses. But these types of healthcare startups don’t offer coverage for ongoing medical issues, like Myers’ ovarian cancer. And they usually require a minimum number of employee registrations, which can be prohibitively expensive for small businesses.

Jill Weber, co-founder of Sojourn Philly, a local hotel group with four restaurants and around 100 employees, said one of her challenges was getting enough people to sign up for offers, especially young people, which would reduce the cost of the group bonus. .

Weber tells me that the low enrollment rates are partly due to the large number of young people working in the restaurant industry. These workers may be under the age of 26 and still covered by their parents’ health insurance, or may simply not be concerned about their health and therefore not interested in insurance.

Myers has felt this before. “I didn’t really care about health insurance until it was a necessity in my life,” they say. “I think that’s how people in the restaurant industry navigate health insurance, because of its inaccessibility for the vast majority of our careers.”

Staff indifference continues to be a problem for business owners like Weber who are required to offer health insurance whether people want to use the benefits or not.

“It’s so, so expensive,” Weber says of insuring his restaurants. “I think we only have 35 people who have accepted health insurance from us, which is a shame because it is part of the compensation. And as salary expectations have risen, it’s been difficult because so many people don’t see health insurance as part of that. Weber says the company pays more than 80% of the premium.

To offset the cost of insurance, Sojourn Philly raised food and drink prices at restaurants. Other cost reduction measures have also been taken. None of its restaurants have fresh flowers left, for example. But she doesn’t think the problem is solved.

Domenick, the independent insurance broker who works with Middle Child as well as other restaurants across the city, says low enrollment levels are partly due to staff turnover. Employees miss the registration period because there is no one to guide them, whereas in an office job, an HR staff member would probably meet new employees individually. Restaurants rarely have a similar structure. This support is one of the main ways Domenick Financial has made itself indispensable to restaurants in the city.

“We only have about a 25-30% enrollment rate,” Cahn says of Middle Child. “So I’m not sure paying for health insurance is the best use of that money. Maybe I could just put all this money in a bank account and every time someone needed to go to the doctor, I could just pay them. Or I could give everyone a two dollar raise an hour, or I could give everyone a year-end bonus of $1,000.

But for Myers, after their diagnosis, Middle Child’s commitment to health insurance helped them feel the restaurant industry was still a meaningful career option. When they decided to apply for the Ward Manager position, Myers worked closely with Domenick to figure out how much it would cost to purchase an insurance plan on the exchange that would cover their medical needs and allow them to stay with the same team of doctors. Myers was then able to factor that number into salary negotiations during his interview for the promotion. This, says Myers, changed their perspective on their work.

“If I hadn’t been able to figure out how to get covered and work that into my salary negotiations, I would have stayed on as a server,” Myers said. “The agreement we have made around my insurance means that I am engaged in work for the first time.”