PROVIDENCE, R.I. — Last winter, James Mark was a 2018 James Beard Award finalist. A few months later, both GQ and Bon Appétit ranked Big King, his newest Rhode Island restaurant, as one of the country’s best places to eat.

But in 2018, the chef and restaurateur spent almost double his personal income on health insurance for his employees: $54,000 to cover a dozen or so people, compared with the $35,000 he paid himself.

Kaiser Health News | By Shefali Luthra | February 6, 2020

Mark spends most of his time at the self-identified “small and strange” Big King, his experimental Asian restaurant on Providence’s trendy West Side, where the handwritten menu changes daily. At downtown’s Dean Hotel, he runs the small cocktail bar and the no-reservations North, which serves dishes like smoked shiitake ice cream and crab and fried kabocha with pumpkin miso. He employs fewer than 50 people, so he isn’t required to provide health benefits. But he thinks it helps with staff retention and is the right thing to do.

After all, if a sous-chef needed an emergency appendectomy, the bill without insurance could be financially devastating. A health benefit, he said, is crucial to treating his employees’ jobs as “viable long-term work.”

The beef is not just about the financial burden. “I could make a lot more money if I didn’t have to pay that,” he said from Big King, a narrow eating space where bottles of golden Japanese whisky and clear sake glimmer against the dark wood paneling. It’s also the confounding choices and hours of administration for which Mark feels, at best, underqualified. Though he tries to pick a good option, he reflected: “I have no idea if it’s a good [health] plan or a bad plan, in comparison to everything else.”

While industry groups have largely opposed the idea of a single-payer system, worrying it would mean tax hikes, some individual owners are increasingly open to the idea. Big companies can hire benefits consultants and managers who arrange and administer employee insurance. Owners of small businesses and restaurants might otherwise decide to let employees fend for themselves.

Mark — and others of his ilk — conclude they would accept higher taxes if the government would take over the herculean task of insuring their workers.

As premiums and health costs rise, the broader industry seems to be eyeing the option with a mix of new curiosity and old concerns.

The National Restaurant Association, for instance, opposed the Affordable Care Act and other Democratic reform efforts that were less sweeping than the single-payer approach but did require employers with 50 or more workers to offer insurance. Today, the trade group doesn’t have a specific stance on Medicare for All, though a spokesperson pointed to concerns about the eventual tax burden its members could face.

The National Federation of Independent Business, a Washington, D.C.-based advocacy organization that represents small-business owners, offered similar worries about the tax hikes likely paired with this system. An internal survey of NFIB members showed 75% opposed single-payer, often citing payroll tax increases as their concern.

Aaron Frazier, the National Restaurant Association spokesperson, suggested that members could get a better health insurance deal by using the organization’s association health plan, which is collectively negotiated by the trade group.

Association health plans — a longtime favorite Republican concept — are a cornerstone of the current White House’s health policy. But they remain controversial and are often held to less stringent coverage standards than other forms of insurance since they may have caps on coverage spending and may not cover some of the Affordable Care Act’s “essential benefits,” such as maternity care and prescription drugs.

A middle ground, proposed by many of the Democratic presidential candidates, might be a “public option,” a government-run health plan that individuals — or their employers — could pay to join if they didn’t like their other options.

That approach could still “go a long way” in addressing some of the concerns restaurant owners outlined, said Linda Blumberg, a health policy fellow at the Urban Institute, a Washington think tank.

The way the Bureau of Labor Statistics tracks health coverage among service-industry workers makes it impossible to determine how many small restaurants offer health insurance to their employees.

Those that do usually face a hefty expense and hours navigating the byzantine world of health insurance.

“It was a lot of bureaucratic stuff that I didn’t really understand. My focus is in the kitchen,” said Richard Wall, who owns Both Ways Café and Catering in Seattle. He hired a broker but reviewed only a few plans before picking one to offer employees. The process was “confusing.”

On the 2020 campaign trail, presidential candidates Bernie Sanders and Elizabeth Warren talk about how their plans would replace the current, private insurance system with a single, government-run program. Their proposed systems would eliminate most cost sharing, so patients pay very little out-of-pocket, and would be financed through taxes. Warren, a Massachusetts senator, would implement her plan through two legislative steps, while Vermont’s Sanders would do so in one.

Rather than focusing on these details, these restaurateurs emphasized the result: having the government step in and guarantee coverage to everyone.

“We would all, everyone involved, be positively affected,” argued Daniel Myers, who co-owns Loyal Nine, a spacious cafe by day and restaurant by night, in Cambridge, Massachusetts.

Loyal Nine insures about a dozen employees, who must meet a $3,000 deductible before coverage kicks in. It also employs fewer than 50 people. But, Myers argued, subsidizing coverage makes sense. Employees are more likely to stay because of health insurance.

Take Jen Wittlin, who manages Providence’s Dean Bar and has worked on and off with Mark since 2012. Health insurance is non-negotiable. She previously had medullary thyroid cancer and needs daily medication and regular endocrinology checkups.

“I didn’t have the option of working somewhere that didn’t offer health care,” she said.

Before realizing that Mark would subsidize insurance, she worked at North but also had a full-time gig at the YMCA, to access its employer-sponsored health care. Upon learning about Mark’s health benefit, she said, she quit her second job.

“People are forced to sacrifice their creative abilities and go into corporate positions because those are guaranteed benefits,” she said. “To have it paid for! That’s the lure of this place.”

It’s a big expense, though. Myers estimates 10% of his payroll goes to health care. His business is too small to bargain with the insurance company. So each year, the price goes up. The variable is by how much.

“You’re pushed up against a wall,” he said. “We have no ability to negotiate our prices. They are what they are.”

Bigger businesses have the purchasing power to wrangle a favorable deal with an insurance company. Smaller ones don’t, said Paul Ginsburg, an economist who directs the USC-Brookings Schaeffer Initiative for Health Policy. That leaves many restaurateurs in a perilous position, he said.

Such pressures fuel these restaurateurs’ support for Medicare for All, even though the cost and financing remain but pencil sketches.

Mark said he doubts he would pay more in taxes than he spends on health care now. Even if he did, he said, it would be a plannable expense. That — and the knowledge that everyone else shares in the burden — would justify the increase, he said.

Still, Wall at the Both Ways Café has questions. How would Medicare for All’s coverage compare with the insurance he gets through his wife’s employer? He’s unsure. And Adam Orman, who co-owns L’Oca d’Oro in Austin, Texas, and subsidizes his employees’ health care with a direct primary care contract and other additional benefits, worried there would still be “so many layers of bureaucracy.”

Still, no longer having the current system and knowing his employees are covered “sounds really good,” Wall said. Orman called it “a step in the right direction.”

The choice between plans and doctors, which is cited as a benefit of the current market-based system, often doesn’t seem an asset to small restaurateurs and their workers.

Recently, Mark decided to explain to his staff how their insurance works. In response, he got “glazed looks — it’s a system that’s really confusing.”