The Free-Lunch Debates

Richard D. Helppie

President

Superior Consultant Co.

Farmington Hills, Mich.

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Wicks writes that restaurant margins are slim and then adds that she could cover the additional costs of a national health-care program by raising her restaurant's prices by "less than 1%." If the market will bear higher prices -- assuming she's in the business to make money -- why wait for Clinton's (or any other) health-care package to raise prices? Perhaps because Wicks and her competitors have discovered that increasing prices past a certain threshold results in diminishing returns. Even if all her competitors are in the same boat, Wicks should know that it's not that easy to raise prices. Some customers will eat a few more meals at home.

Global assessments, such as withholding and taxes for a health-care package, hit every business, not just Wicks's. If she must raise her prices to maintain her margin, so must the rest of us, and her challenge is compounded. Consider an example in which Wicks's restaurant, the White Dog Cafe, buys lettuce from a distributor who buys it from a grower. Assume that grower and the distributor, like the White Dog Cafe, must raise their prices by 1% to cover their health-care bills. Her cafÉ's prices must cover not only her $30,000 health-care bill but the distributor's and grower's price increases as well.

Dr. B. D. Howes

President

HBI International

Pasadena, Calif.

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Some questions about the article "Why Us?" which appeared in the June 1994 issue of Inc.: Does Judy Wicks really believe that she can insure all 96 of her employees for only double what she pays to insure 15 people? Does she really think she will be able to throw in workers' compensation and health claims from auto accidents and only double the cost? Does she know that union shops and companies with more than 500 employees are exempt from joining the alliances? Does she know that all others, even those that don't pay for coverage, will be dumped into the regional alliances? Does she know that businesses are liable for any shortfalls? And does she really believe that the government can insure her employees for $625 each per year?

Thomas W. Johnston Jr.

Vice-President

Frankenmuth IGA Foodliner

Frankenmuth, Mich.

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[Wicks argued that restaurant workers are considered second-class citizens in the economy. She supports the health plan because it would help her to change that assessment.]

Judy Wicks states that she is in support of the health-care plan because her business could cover any additional costs very easily. No wonder -- she pays her employees the minimum wage or less, as they obviously exist on tips. She has no real payroll and she does not offer real jobs, a point she readily admits.

On the other hand, my wife and I run a business that employs professionals and technical people -- real jobs. We already provide health insurance for all 82 employees at a cost of approximately 4.5% of payroll. The proposed plan would have us pay 7.9% for the same or less coverage. Where would the money go? Obviously, to help Judy Wicks do what she should be doing anyway and to cover all those who cannot or will not work.

James P. Weidener

Vice-President

Weidener Surveying and Mapping

Miami

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Judy Wicks demonstrates that what is ostensibly good for small business is not necessarily good for the nation.

She wrote that the proposed 3.5% cap on payroll costs for mandated full health-insurance coverage for her restaurant would reduce by $80,000 yearly what she would have to pay a private insurer for similar coverage. Ah, that is the rub!

There is no way the feds could provide similar coverage at a price below what a private insurer can. The difference in costs would have to be made up, made up by a nation in debt going further into debt, further into insolvency. The proposed payroll costs for mandated coverage are unrealistically low.

Rather, Judy Wicks, with $3.6 million in gross receipts to work with (man, I wish I had those numbers to work with), would be better off raising prices a meager 3%, perhaps posting a feel-good sign indicating the reason for the price increase, turning a lemon into a lemonade, and being proud the coverage was a Judy Wicks initiative, not a mandate from Big Brother.

Donald Davitt

Owner

Iron Horse Cafe

Chino Valley, Arizona

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It sounds as if Judy Wicks and the White Dog Cafe are ready to provide health insurance for the whole company. I encourage them to proceed. They could have done it years ago. I already provide health insurance for all my employees.

The real questions in this debate are whether or not health insurance can be mandated for all employees without a resulting loss of jobs and control; whether or not taxpayers can afford another government bureaucracy; and whether or not Americans want restricted health insurance and health care. Wicks's decision for her own company is not necessarily right for all companies; the beauty of our present system is that each company can choose the solution that's best for it.

Mike Wilson

Wilson Property Services

Phoenix

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