Insuring Atlanta’s Restaurant Workforce: ‘ACA Ain’t Working’

Castellucci: ‘Something has got to be done to fix this’

Castellucci: ‘Something has got to be done to fix this’

Young people dominate the restaurant industry. Many are healthy, feeling great, and have not yet considered buying health insurance. As it currently stands, though, these individuals will get dinged on federal taxes if they don’t get it.

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Interviewing doctors, healthcare providers and restaurant owners around Atlanta, it seems some believe what’s needed is something with less red tape attached. Something that makes sense for those who do want it and those who don’t. Something that’s fast and easy and affordable. Some might say that what’s needed is the McDonald’s of Healthcare.”

If you ask Federico Castellucci, president of Castellucci Hospitality Group —which owns Sugo, The Iberian Pig, Double Zero and Cooks & Soldiers — the Affordable Care Act (ACA) has complicated matters for restaurant owners and employees alike.

Castellucci said an employer mandate of the ACA “adds an administrative burden on us that for most companies is very onerous.”

He said that for companies like his — “We’re a small, family run business” — it’s difficult to provide coverage for every single employee in the way that a large corporation can.

From left to right: Line cook Raul Dominguez, Castellucci, Executive chef Landon Thompson, and sous chef Andy Montesano talk shop prior to a busy evening at Cooks & Soldiers. Photo: Frank Reddy
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From left to right: Line cook Raul Dominguez, Castellucci, Executive chef Landon Thompson, and sous chef Andy Montesano talk shop prior to a busy evening at Cooks & Soldiers. Photo: Frank Reddy

“When you have businesses like ours, there are many employees but not a lot of profitability per employee,” Castellucci said.

“If you look at profit per employee, the restaurant business is one of the lowest. Whereas you have consulting firms or legal firms or accounting firms where the profit per employee is very high, and therefore you’re able to do that.”

What has arisen, he said, from the requirement to buy healthcare coverage (and the fear of being fined for not doing so): “fine avoidance insurers.”

“People now are putting products together that essentially are just to supply business with a product they can offer their employees that is for fine avoidance,” Castellucci said.

“It keeps them from getting a $600 or $700 fine on their taxes for not having insurance … and for us, it avoids the $2,000 or $3,000 fine … by providing minimal essential coverage.”

Added Castellucci: “It’s a checkup once a year and nothing else, basically. If you were to think that’s cheap for us, it’s not. It costs us thousands and thousands of dollars a year to provide something that is of very little value to the employee.”

Larry Hightower, who is CEO of Vxtra —an Atlanta company that he said “focuses on the high-end, fully insured market” — chimed in on the matter.

“Whether it’s the food industry or any other of the small individual or group markets, it’s all the same: employers are offering minimal essential coverage plans in order to be compliant with the federal regulations, but they’re offering those plans not to provide quality benefits … they’re really providing the benefits to comply with the federal regulations.

The result?

“There’s a whole industry that’s sprung up around minimal essential coverage,” Hightower said. “The bottom line is they would prefer not to have the government in their business at all.”

Dr. Jeffrey Gallups, CEO of the ENT Institute — which has locations all over Atlanta — said the restaurant industry has indeed been heavily affected by the ACA.

“Most of these people are young and healthy, and they don’t want (health insurance),” Gallups said. “Most of these people are under the age of 40.”

In order to fix this, he said, owners of the food service industry are going to have to “step up and organize for their employees on their behalf.”

Castellucci said that, as it stands, “the government is subsidizing the (companies) who are overcharging everyone, when in fact we need to limit the number of regulations we’re putting on the people who put these plans together … and then offer an alternative on the low end that says ‘hey, if you’re 25, and you’ve never been sick and you’re healthy, and you get hit by a bus tomorrow, the government will handle the cost of a freak accident like that.”

Added Castellucci: “I think there has to be some kind of change. Something has got to be done here to fix this.”

So, if the ACA is so bad, how can it be fixed? Why isn’t there a disruptor? Why isn’t there a McDonald’s of Healthcare?

Castellucci feels there certainly needs to be less regulation on all.

“We need to allow the insurance companies to handle this … in an environment free of intense regulation. When there is good competition and true competition, the best products will succeed, and that is not what’s happening right now for people who want insurance in the restaurant industry.”

From left, Thompson, Dominguez, Montesano and Castellucci share some laughs prior to a busy evening at Cooks & Soldiers.
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From left, Thompson, Dominguez, Montesano and Castellucci share some laughs prior to a busy evening at Cooks & Soldiers. Photo: Frank Reddy
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David Ploski
3 years ago

The subsidies for those making less than 40k a year make ACA almost free. In my experience most tipped employees are simply not pursuing the options available to them.

William
3 years ago
Reply to  David Ploski

Agree with David. Unfortunately the nature of this “workforce”. Quick cash with
few long range plans.

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