Health Ins Color 1

Why Is it So Hard for Philly Restaurants to Offer Health Insurance?


Thin margins and high staff turnover leave restaurant owners in a bind. Some businesses find their own solutions.

Health Ins Color 1

Illustration by Malachy Egan

When Sarah Myers was diagnosed with ovarian cancer in March 2021 after more than a decade working in the restaurant industry, they wondered if the disease would force them to change careers.

“There was a part where I was like, ‘Okay, maybe it’s time for me to go into the nonprofit sector,'” Myers says. “I worked in restaurants and then also worked at a non-profit organization to try and build my resume. But I also realized: I don’t want to do anything else. I love working in the restaurant industry. That’s why I do it. I just had to find out what my solution was.”

In October of the same year, Myers accepted a job at Middle Child Clubhouse in Fishtown. Initially, their health care was covered by Medicaid, which they have used since their diagnosis. But when the opportunity arose to take a position as the restaurant’s service manager—a position that would bring more money and responsibility—Myers worried that the income bump would change their Medicaid eligibility, potentially significantly increasing their health care expenses and even the increase in salary.

Myers is one of less than 50 employees at Middle Child. According to the Affordable Care Act, Middle Child owner Matt Cahn is not required to offer health insurance for a business of that size. Even so, Cahn says, he spent a lot of time researching insurance plans. The labyrinthine systems of the healthcare world have become a bit of an obsession for Cahn, who is somewhat prone to obsession to begin with.

“If I’m going to put that level of attention to detail into making a Shopsin Club and figuring out how to brine and roast a turkey breast, why wouldn’t I do the same with something that really touches people’s lives? ” Cahn said. “At the end of the day, buns are fucking buns, and it doesn’t matter at all. But people’s livelihoods really matter.”

It’s no industry secret that health insurance has historically been unavailable to most workers at small, independent restaurants. According to a 2019 Restaurant Success Report published by popular restaurant technology platform Toast, 31 percent of restaurants surveyed offered medical insurance. (Cahn says that none of his previous restaurant jobs included health insurance.) In these environments, small margins and high staff turnover make offering benefits expensive and complicated.

This lack of insurance options for restaurant workers, Myers says, has created a kind of secondary network of health care options. “People on staff, especially the people who have been doing it for a very long time, have their solutions for when they didn’t have health insurance,” Myers says. “They’ll be like, ‘Oh, I know this clinic that does, like, free teeth cleanings every other Monday.’ We have all these little pieces of information because of how inaccessible our health care has been to us for so many years.”

That aside, the general inaccessibility of health care coverage for restaurant workers contributes to staff turnover — which is one of the factors that makes offering benefits to owners so difficult in the first place.

“I see the lack of benefits as a barrier for us to grow our industry and help solve the staffing problem,” said Maria Campbell, the founder of Cooks Who Care, a program of the Community Foundation. Campbell founded the organization in 2017 in response to what she sees as a mental health crisis in the industry. Much of her work at Cooks Who Care focuses on developing more robust health insurance options for restaurants, to make the industry more attractive to workers of all backgrounds.

One of Campbell’s goals is to create a fund that offers micro-grants to help offset all types of health care costs for workers in the industry. These payments, which Campbell said can be as much as $300, will help pay for things like a prescription that isn’t covered, whether or not a person has health insurance. Campbell’s hope is that people can apply for money for everything from a one-time doctor’s visit to ongoing appointments with a therapist, or even for emergency care.

Micro-grants would be especially helpful in addressing the needs of undocumented workers, who make up a large but hard-to-measure percentage of employees across the country and are ineligible for insurance regardless of income or position. Until that policy changes, Campbell’s out-of-the-box relief (and other alternatives like it) will remain essential.

As Cahn prepared to open Middle Child, he found his own out-of-the-box approach for his employees. “Technically, we don’t offer health insurance,” he explains. “I know it doesn’t sound good off the bat, but I’m not interested in being like, ‘Oh, we offer benefits, we offer benefits,’ but it’s actually not good coverage and is very expensive for everyone involved is.”

It was important for him to create as much stability as possible for the team. What Middle Child does offer is support with accessing insurance. Each employee can use a private website built by a company called Domenick Financial, an independent insurance broker run by Matthew Domenick. The webpage details Middle Child’s offerings as well as contact information for Domenick and his team, who act as benefits consultants and liaisons with the state exchange. If an employee is not eligible for a minimum subsidy of 25 percent (due to their income) through the exchange, Middle Child provides a taxable allowance to cover the difference.

During the planning stages of his health insurance search, Cahn surveyed the staff and found that most people were either not interested in receiving health insurance or said they would opt for lower-cost, higher-deductible plans. Moving forward with this option meant that someone who had to go to the hospital for a broken arm or stitches could still be on the hook for many thousands of dollars.

To protect his staff from potentially high medical bills for these kinds of emergencies, Cahn pays about $17 a month per employee to enroll each team member in an emergency plan through a third-party insurance provider, which essentially provides catastrophic care — think emergency room visits , ICU admissions, certain types of surgery and stitches.

Cahn looked at offering a group health care plan — the most common option for large companies — that gives employees up to three options to choose from, all typically from the same insurance company (think UnitedHealthcare or Independence Blue Cross). He also inquired about health insurance startups — services intended to offer primary care at a lower cost, without covering emergencies or chronic illnesses. But these kinds of health care companies don’t offer coverage for ongoing medical issues, like Myers’ ovarian cancer. And they usually require a minimum number of logins by employees, which can be prohibitive for small businesses.

Jill Weber, co-founder of Sojourn Philly, a local hospitality group with four restaurants and about 100 employees, says one of its challenges has been getting enough people to sign up for offers, especially younger people, that would lower group premium costs. .

Weber tells me low enrollment rates are partly due to large numbers of young people working in the restaurant industry. These workers may be younger than 26 and still on their parents’ health insurance — or may simply not be concerned about their health and therefore not interested in insurance.

Myers once felt that way. “I honestly didn’t care about health insurance until it was a necessity in my life,” they say. “I think that’s how people in the restaurant industry navigate health insurance, because of how inaccessible it has been for the vast majority of our careers.”

Staff indifference continues to be a problem for business owners like Weber who are required to offer health insurance whether people want to use the benefits or not.

“It’s so, so expensive,” says Weber about her restaurants’ insurance package. “I think we only have like 35 people who have accepted health insurance with us, which is unfortunate because it’s part of the compensation package. And as the expectations around wages have gone up, it’s been difficult because so many people don’t think of health insurance as part of that.” Weber says the company pays more than 80 percent of the premium.

To offset the cost of insurance, Sojourn Philly increased food and beverage prices at the restaurants. There were also other cost-saving measures. For example, none of her restaurants have more fresh flowers. But she doesn’t feel the problem is solved.

Domenick, the independent insurance broker who works with Middle Child as well as other restaurants around the city, says the low levels of enrollment are due in part to staff turnover. Employees miss the onboarding period because there’s no one to walk them through it, while an HR staff member in an office job is likely to meet new hires one-on-one. Restaurants rarely have a similar structure. This support is one of the main ways Domenick Financial has made itself essential to restaurants across the city.

“We only have about a 25 to 30 percent sign-up rate,” says Cahn of Middle Child. “So I’m not sure that paying for health insurance is the best use for that money. I might just put all that money in a bank account and then when someone needs to go to the doctor, I can just pay for it. Either I can give everyone a two-dollar-an-hour raise across the board, or I can give everyone a $1,000 year-end bonus.”

But for Myers, after their diagnosis, Middle Child’s commitment to health insurance helped them feel that the restaurant industry was still a meaningful career option. When they decided to apply for the service manager position, Myers worked closely with Domenick to understand how much it would cost to purchase an insurance plan on the exchange that would cover their medical needs and enable them set to stay with the same team of doctors. Myers was then able to take that number into salary negotiations while interviewing for the promotion. This, Myers says, shifted their perspective on their work.

“If I couldn’t figure out how to get covered and make that part of my salary negotiations, I would have just stayed a server,” Myers said. “The agreement we worked out around my insurance means that I am committed to work for the first time ever.”

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