• John Metz, a Florida franchise owner of several restaurant chains, including 48 Hurricane Grill & Wings, 40 Denny’s and several Dairy Queen, says he plans to cut employee hours and add a 5 percent surcharge to customer bills as of January 2014. “Everyone’s looking for a way to not have to provide insurance for their employees," Mr. Metz told Fox News on Thursday. "It’s essentially a huge tax on all us business people.”
• Zane Tankel, CEO of Apple-Metro, which operates 40 Applebee’s franchises in the New York City area, says expected health-care costs will prevent him from expanding or making new hires. “In this environment you can’t raise prices … so then it’s cut back on overhead,” he told Fox Business Network last week.
The reform law puts companies with already-slim profit margins in a bind, especially if they pay minimum wage, says Adam Powell, president of Payer+Provider Syndicate, a health services consulting firm in Boston.
“Given that many restaurant employees were earning the minimum wage before [Obamacare], it is often not possible for employers to decrease wages to cover the cost of providing insurance,” Mr. Powell says. Employers "must either pay the penalty or increase the value of their total benefit package by adding [health] insurance. In either scenario, the law increases the cost of maintaining a minimum-wage full-time employee.”
Revenues from companies that elect to pay the $2,000-per-worker penalty are to be used to offset government costs of operating state-based "exchanges" where uninsured workers can shop for affordable health insurance. As of Friday, 22 states plus the District of Columbia have agreed to operate the exchanges, while 14 have refused, deferring to the federal government. Fourteen have not decided.