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ACA Agonistes
Restaurants Add Obamacare Surcharge

Several restaurant owners in Los Angeles have chosen a visible way to offset the costs of providing their employees with health insurance for the first time: an Affordable Care Act surcharge. In response to the ACA employer mandate and out of a general sense of the duty they feel to provide health care to their employees, “more than a dozen” high-end restaurants in the area have added a separate three percent charge to every bill, according to the LA Times. More:

The healthcare surcharge, the restaurant owners insist, isn’t a political statement, but a way to offer valuable benefits to employees while maintaining their profits, which are slim even at the most successful establishments.

“We want our staff to have healthcare,” said Josh Loeb, the co-owner of popular dining spots including Milo & Olive and Rustic Canyon. “It’s not because we support Obama or don’t support Obama, or are Democrats or are not Democrats.” […]

So far, the restaurant owners say the reception from customers has been mostly positive — although a few have grumbled.

Opponents of the ACA will of course poke fun at this potential PR problem for the law, while supporters will note that customers seem okay with it so far—and that the surcharge is an acceptable price to pay for the good cause of expanding coverage. But putting that debate to the side, this story shows how the continued reliance on employer-sponsored health care introduces complex epicycles into funding health care. If individuals purchased insurance directly, restaurants wouldn’t need to fund insurance through charges like this.

Of course, ultimately the most important task is to bring costs down. Unless we do that, the continuously increasing cost of health care could lead to a five or six percent surcharge—or a higher tax burden for subsidies if we move away from employer-provided insurance. Neither possibility is attractive—for employees, employers, and customers alike.

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  • rheddles

    Bad link for Big Easy

  • Boritz

    “If individuals purchased insurance directly, restaurants wouldn’t need to fund insurance through charges like this.”

    The real story is that businesses, whether a restaurant or a major corporation, don’t pay taxes.  Their stock holders do and their customers most certainly do, but business is in the business of passing on costs.  One of the political parties does not remotely believe it though.

  • Jacksonian_Libertarian

    The free market will deal with these price increases as it always does, by reducing demand for these restaurant’s goods and services.

    • Bob

      Mmmmmmmmmmm, maybe, but not necessarily. If the restaurants are good enough that people continue to patronize them, it will reduce demand for other goods and services the same customers might otherwise buy.

  • FriendlyGoat

    Why not just add a surcharge called “protecting the profit margin surcharge”? The customers of these “non-political” owners would surely understand, right?

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