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The Daily Signal
Pizzeria Drops
3% Obamacare Surcharge When Customers Objected
Leah Jessen
December 02, 2015
A pizza shop scrapped a surcharge of 3 percent on customers’
checks to cover Affordable Care Act fees for employees a day after
adding it.
On Tuesday, Brooklyn restaurant Franny’s put a note on its website
saying the pizza shop would add the surcharge because of
Obamacare. The message—“a 3 percent surcharge will be added to all
checks to contribute to the cost of the Affordable Care Act for all
Franny’s employees”—remained on the restaurant’s online menu as of
Wednesday afternoon.
But the extra charge reportedly no longer will be in effect because
some customers viewed it as “anti-Obamacare.”
The employer mandate central to the Affordable Care Act, or Obamacare,
requires businesses with 50 or more full-time employees to offer
“reasonably priced” health insurance by 2016, or pay a steep penalty of
$2,000 per worker.
“The requirement is that they provide coverage of a certain minimum
amount and that it be affordable to their workers,” Ed Haislmaier, an
expert in health care policy and markets at The Heritage Foundation,
told The Daily Signal.
The employee count at Franny’s alone isn’t large enough to meet the
mandate requirements. But the health law applies because the owners of
Franny’s, the husband-wife team of Andrew Feinberg and Francine
Stephens, also run Rose’s Bar and Grill and the BKLYN Larder market.
The Obamacare surcharge had been added to all three establishments, NBC
New York reported.
“I’m hoping that on a community empathetic level, that most of the
people who love Franny’s will understand and will continue to come,”
Stephens told the New York Eater before killing the new charge. “On a
realistic level, I think a number of our guests will not be able to
come as much.”
Instead of the Obamacare surcharge, Franny’s reportedly will increase
its menu prices. An updated menu was expected to be posted Wednesday.
In a letter to customers explaining the situation, according to Eater,
the restaurant said:
Initially, we thought, before we start putting $22 pizza on the menu,
let’s be transparent about what that money is actually going towards.
However, it seems given the stated preference of our guests as well as
the potential for misinterpretations into the future, we will retract
the surcharge and reconfigure our menu pricing instead.
Providing health care for all three establishments will cost about
$200,000 per year, Stephens told DNAinfo New York.
“This is a cost that we cannot absorb without going out of business,”
she told the New York Daily News.
Heritage’s Haislmaier said an employee’s share of the cost of the
Obamacare mandate is required not to exceed about 8 percent of
his or her pay.
“These additional costs are ultimately borne by the employees,” he said.
Haislmaier said the effect of the Obamacare mandate on businesses such
as Franny’s is much like an increase in the minimum wage. Employers in
situations like Franny’s, he told The Daily Signal, “have basically two
choices: find ways to reduce the amount of labor so they will lower
their expenses or [try] to find ways to pass the cost, the increase of
labor costs, onto their customers.”
The route Franny’s originally chose to deal with the additional costs
is “one strategy of several strategies” employers can take, Haislmaier
said. The best option depends on the employer and the circumstances, he
said.
In New York City, rising minimum wage costs have some restaurants
considering eliminating tips and instead implementing a surcharge to
help pay for higher wage and health care costs, the New York Post
reported.
Haislmaier said another tactic used by employers to try to fall below
Obamacare’s threshold is to drop some workers to part-time status, so
the employers won’t have to provide health care coverage.
It is not a new phenomenon for restaurants to add an Obamacare
surcharge. In 2014, more than a dozen high-end eateries in Los Angeles
reportedly added a surcharge to cover employees’ health insurance.
Several restaurants in Florida also tacked on the fee.
Read this and other articles with links at The Daily Signal
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