Restaurant Owner Outlines Health Care Obstacles Before Congress

Jan 27, 2011

Count restaurant owner Scott Womack among the many small business owners nationwide who say they can’t afford the steep fines and mandates loaded upon them by the new health care law.

“For restaurants, providing qualifying coverage to all full time employees is a huge new expense,” says Womack, a 25-year restaurant veteran and the owner and president of Womack Restaurants, a 12-unit IHOP franchise in Indiana and Ohio. Womack testified on behalf of the U.S. Chamber before the House Ways and Means Committee on January 26.

Womack estimates it would cost him $7,000 per full time employee to provide health care coverage. “This new expense is beyond our ability to pay. I estimate the cost to my company to be 50% greater than our company’s earnings. Let me state this bluntly: this law will cost my company more money than we make,” Womack told the committee.

With restaurants unable to raise prices in a weak economy, Womack says his only alternatives are to cut costs, cut staff, reduce employees’ hours and transition full time workers into part-time status, or pay the $2,000 per employee penalty for not providing coverage. “For my company, these penalties amount to 60% of our earnings,” Womack estimates.

Additionally, Womack says the law’s requirements will force his company to cease new restaurant development and may forfeit a $360,000 development agreement he entered into in 2006 to expand his company into Ohio, potentially sacrificing $22 million in construction and development spending and 260 full time restaurant jobs.

Womack urged Congress to dismantle the health care law, or at the very least, address some of the major problems in the law, including the employer mandate, the 1099 paperwork mandate, new restrictions on flexible spending accounts and health savings accounts, and the tax on “Cadillac” health plans, “will eventually hit everyone unless health insurance magically stops getting more expensive,” Womack says.

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