Health care: the new battleground

Nation's Restaurant News, Jan, 1994 by Richard Martin

Predicting a costly epidemic of business ills and fatalities, the National Restaurant Association is spearheading a battle to surgically remove the proposed mandatoty employer funding of insurance from the Clinton administration's health-care reform agenda.

Now engaged in one of the landmark political challenges of its 75-year history, the NRA was qucik to attack the Clinton prescription because of its plan to force employers to cover most of the cost of health coverage for all employees.

The restaurant association earned recognition as a leading critic last spring when NRA president Stephen E. Elmont engaged in a dramatic verbal joust with Vice President Al Gore and other administration oficials during a televised debate in which Elmont blasted the Clinton plan as "un-American."

Gore "was truly shocked" by that label, Elmont explained. "The point I made was that the free-enterprise system was built upon and around perceptible differences in products" and companies, meaning that appropriate market forces should be left to determine which restaurants offer health-care benefits.

Elmont also challenged White House health policy guru Ira Magaziner, telling him that reform is "not a business issue; it's an American issue.c If Americans want to pay for universal coverage, the NRA leader explained, then a tax should be spread equally among citizens, not just employers.

Since Elmont's attention-getting role in that debate, the NRA has hammered home aggressively the message that foodservice -- a huge component of the national economy but one in which thin margins, high labor costs and inordinately low productivity are commonplace -- would be under pressure to cut tens of thousands of jobs if the Clinton plan's mandates are imposed.

National Restaurant Association officials were mustering their lobbying forces against employer funding of universal health care long before most Americans could confront the daunting implications of a new, federally managed entitlement program that would turn the nation's entire population into a business-subsidized beneficiary class.

Through tentacity and the strength of their message, the NRA -- and Elmont personally -- appear to have sparked a growing awareness on Capitol Hill about the threats posed to businesses and jobs by the administration's Health Security Act legislation.

Since last September the introduction of four alternative health-care reform bills -- two in the House and two in the Senate -- that would not require employer payments suggests that funding provisions of the Clinton plan are being viewed with growing skepticism by legislators.

"We're probably the driving force behind that," said Elmont, who regards the attention commanded by the NRA's position as stemming largely from his organization's aggressiveness on the issue "and the fact that I'm a Democrat" heading a business lobby.

Confident in his political credibility and access to the congressional majority, the Boston restaurateur also brings health-care credentials to bear on the legislative debate. A trustee of two teaching hospitals at Harvard University and a man of obvious erudition on the reform issue, Elmont feels it is fitting that health care has come to dominate much of his term in office as the NRA's leader.

"As Dick Marriott said, there couldn't be a better time for me to be president," Elmont remarked recently while preparing to debate employer mandates yet again, this time over dinner with Massachusetts Sen. John Kerry and several of his constituents -- restaurateurs whom Elmont said appeared ready to support the Clinton plan.

After the dinner Elmont reported that his suspicions were correct about his dinner companions' comprehension of the measure. "Some of the restaurateurs didn't understand the law and what percentage of their payroll was attributable to health care," he explained. "They're frustrated because without government intervention they don't feel they'll be able to continue to provide health care."

Ironically, it is through government intervention -- as prescribed by the Clinton proposal -- that restaurateurs would have no choice but to pay for coverage. But, the NRA warns, those contributions would be in the form of burdensome, new payroll tax that would erase the profit margins of many operators and would likey increase over time.

In testimony on health-care reform before the House Small Business Committee last August, Elmont stated the NRA's basic concern about mandatory benefits. "Why does a health-care mandate spark such concern? In a word, cost. Believe me," he said, citing NRA studies, "restaurateurs would provide insurance benefits if they could afford the premiums."

Pointing out the extreme sensitivity of today's customers to menu-price inflation, Elmont told the legislators that cutbacks on hours and jobs would be the only recourse available to most restaurateurs hit by insurance costs of up to 7.9 percent of their payroll as required by the Clinton formula.

In a message that would be substantiated increasingly, refined and repeated endlessly over the ensuing months, Elmont also described for the committee the exceptional characteristics of the foodservice industry that make it vulnerable to the kind of sudden, steep labor cost inflation posed by mandated health benefits.