Unhealthy situation

Servers, stylists, bartenders and others often work without the security of medical insurance

 

By Tara Nurin
Philly EDGE Correspondent

 

Paul Smith believed he could live through the pain.  

Though the normally fit 41-year-old Philadelphian was throwing up daily and could hardly stand, he continued to go to work every day because he needed the money. 

After a week had passed without a change in his condition, Smith knew he had to do something. Not because he wanted to, but because he was scheduled to ride in a bike race with Tour de France champion Lance Armstrong in Washington D.C. that weekend; he didn’t want to miss the event due to his persistent illness.

Suffice to say, Smith never made it to D.C. that weekend. 

Instead, he spent 10 days in the hospital recovering from surgery that involved temporarily removing his intestines to clean out the biological detritus that had splattered all over his abdominal cavity. Doctors told Smith he would have died if he’d waited even a few more hours to seek medical attention.

Now, 18 months later, Smith is alive, but still suffering. 

He stayed out of work for six weeks – as long as he possibly could without earning any income - and for his trouble, he ended up with a hernia, a somewhat common side-effect of his surgery, which means his intestines are painfully bulging through the lining of his stomach muscles.     

He says he owes $20,000 in medical bills.

Smith is a waiter who - just like before his surgery - has no medical insurance.

The lack of full or partial medical insurance is a problem that plagues a number of service workers, as well as other laborers, in the Philly region. Every time you eat at a restaurant, buy a pair of boots or check into a hotel for a bachelorette party, you’re probably being helped by a worker without any employer-provided medical insurance.

“Health care is expensive and it eats into our bottom line,” says Jim Creed, president of the Philadelphia/Delaware Valley chapter of the Pennsylvania Restaurant Association and owner of Creed’s Seafood & Steaks in King of Prussia. “You can only pass so much of these expenses on to the customer.”

Which means the responsibility of health insurance often gets passed back to the employee.

“(Medical) insurance for me would cost about $287 a month,” Smith calculates. He claims he earns $30,000 a year as a full-time waiter at Philadelphia’s Moshulu. “(If it cost) $100 a month, I could do it. Anything above that ...”

Restaurant owners and managers tend to be sympathetic to their service employees’ plight, but many say they’re helpless to do much. Some of them don’t get employer-sponsored insurance either.

 “The cost of health insurance has been very prohibitive for us,” complains Bill Bergan, Moshulu’s general manager, who says his restaurant offers benefits only to top managers who are willing to accept a lower salary.  

“If we could offer it to everyone and stay literally afloat,” Bergan says of the Delaware River-docked restaurant/boat, “then of course we would do that. Nothing’s more important to us than happy employees. If my employees are happy, they’re going to take very good care of our guests.”

Other managers also say they realize they could potentially attract and retain better workers if they were able to fully or partially provide health benefits like other industries do. But they say the average restaurant operates on just a five percent profit margin, while many industries and businesses nationwide operate on 10 percent or more.

“From a practical standpoint it just boils down to ‘How many expenses can you have in a business with the margins as slim as they are?,’” Creed asks rhetorically.

Judy Wicks, owner of West Philadelphia’s White Dog Café, agrees in theory with that assessment. 

“We have more than 100 employees, so you can imagine what it would cost to pay for all of them. We wouldn’t be in business,” Wicks says.

But Wicks does pay for some of her employees’ health care costs, and her business is thriving. Wicks, a well-known social activist, says she spends $50,000 a year on health care contributions to all of her 30-hour-plus employees who have worked at the White Dog, and her corresponding gift boutique The Black Cat, longer than three months to a year, depending on their position. That situation is rare, but not unique, in the Philadelphia area.

For Wicks’ employees it works something like this: White Dog Enterprises offers one choice of plan, an Aetna Preferred Provider Option; the company pays 55 percent (about $125 dollars per month) of each participating employee’s medical and dental insurance premiums and the employee pays the rest (about $90 per month). Forty-eight out of 65 eligible employees have currently signed on for the plan.

“I don’t mind taking it out of my pocket,” explains Wicks. “But the big question for me is ‘Is it better to spend $50,000 more on giving (higher-earning) tipped servers more benefits, or using that $50,000 to raise the salaries of the people in the kitchen?’”                                        

Wicks is not alone in her efforts. According to the National Restaurant Association, half of the nation’s restaurants do make some sort of reduced-rate health insurance plan available to salaried and hourly workers, even if the restaurant doesn’t pay for any of it.

Managers at Moshulu, for instance, use an insurance broker to negotiate a group rate with Aetna. Full-time workers can opt to buy insurance through the restaurant because it’s cheaper than buying individual insurance on their own. They can choose from three plans that range in cost from $108 a month for an individual male to $458 a month for a family. But the employee pays the premiums directly to the insurance company, because, as GM Bergan says, “The administrative part alone would be so mind-boggling, I’d have to hire someone full-time just to keep track.”

While no one knows for sure whether chain restaurants are more likely than your neighbourhood BYOB to offer health insurance to service employees, some speculate that is the case.

“Smaller places don’t have as much leverage to negotiate costs,” Patrick Conway, CEO of the Pennsylvania Restaurant Association says. “And there’s a greater profit margin for bigger places.”

The same educated guesswork can apply to other service industries whose associations don’t analyze health insurance trends as closely. Representatives of various retail shops and local hotel associations say the assumption is often that bigger chains are able to offer better insurance options for their employees. 

While there isn’t any hard evidence to support that larger chains can better provide health care insurance, one can point to the small-to medium-sized hotels and shops that negotiate and purchase lower-cost insurance through local chambers of commerce and business groups because they may not be large enough to do it as cheaply on their own.

Ben Frank, executive director of the Center City Proprietors Association explains: “An association like ours can connect a retail shop owner to an insurance broker so that the shop owner can arrange for better rates for her employees. But so far, our members can’t band together as a negotiating entity, and they first have to pay us their yearly association dues. So it’s not a solution for someone merely seeking insurance.”

This could change with a bill now working its way through Congress that would allow members of a trade organization to bargain with insurance companies as a single group. Groups like the Center City Proprietors Association and the National Restaurant Association support the bill but its future is unclear, given that it’s opposed by the powerful insurance lobby.

Until legislation passes, or there’s some sort of reform, many owners remain unable to provide insurance and many service workers remain unable to access it. As a last resort, some service workers unwilling to risk life without health insurance settle on buying an individual plan, either through a major or a lesser-known short-term company. But here, coverage is often pricey or spotty. 

A New Jersey promotional product model, “Jane,” who requested that her name not be used in this story, says she bought short-term health insurance online at the Internet’s primary insurance portal, www.ehealthinsurance.com. 

But she has a $2500 deductible and no prescription plan, so she avoids the doctor and buys her meds from Canada, “like the old people,” Jane says. And Jane says she had to behave cautiously during a recent trip abroad because her coverage didn’t extend out of the country. The upside is that it makes her feel better to know she won’t have to declare bankruptcy if something unthinkable happens to her.

She also knows she’s better off than Smith, who, as a waiter with no paid time off, went back to work with surgical staples still holding his stomach together. His hernia won’t mend without a second surgery, but a year-and-half later, he continues to wait tables despite his debilitating injury because he can’t even pay off his first one.

“I keep on getting the bills,” he says with a bitter chuckle. “I don’t even open them. I keep getting lawyer phone calls. I don’t answer them. When there’s nothing you can do about it, there’s nothing you can do.”