National Restaurant Assn. and UnitedHealth join on coverage effort for restaurant workers

The National Restaurant Assn. and insurance giant UnitedHealth Group Inc. are teaming up in a bid to make coverage more accessible to millions of restaurant workers without health benefits — three years ahead of when the healthcare overhaul would require everyone to have insurance.

The initiative, though limited at the outset, marks one of the largest private-sector efforts to expand health insurance coverage.

And its architects said it could ultimately help cover the 4 million to 6 million restaurant employees without health benefits, or about 10% of the nation’s current population of uninsured.

The company, however, could still retain the right to deny coverage to those with preexisting conditions, at least until 2014.

The association plans to announce Friday, at its annual convention in Chicago, a website and a menu of insurance plans in Pennsylvania and Colorado and then expand into California, Texas, Florida, Illinois and other states within a year.

“This is a business issue for the restaurant industry,” said Dawn Sweeney, chief executive of the influential restaurant group, which represents about 380,000 employers nationwide.

“Because of the narrow profit margins of the restaurant business, it has been an ongoing real challenge for our industry to find affordable [insurance] products they could offer to employees,” Sweeney said.

Sweeney, who began the push to create an insurance partnership more than two years ago, said the association’s members had identified healthcare as a top issue of concern.

It also is a top concern for state officials such as Pennsylvania Gov. Ed Rendell. The Democrat is trying to stop the erosion of insurance coverage until the state can create an insurance exchange in 2014, as outlined in the recently passed healthcare law.

“At a time when we have 1 million uninsured Pennsylvanians, a program like this is very welcome,” Rendell said Thursday, calling it a potential “gap filler” until 2014.

Pennsylvania, like many states, plans to operate a government-overseen insurance marketplace where small businesses and individuals should be able to shop for coverage that meets basic minimum standards.

The restaurant industry, which employs nearly 13 million people nationally, has among the lowest levels of health coverage, a reflection of the transitory nature of the workforce and the prevalence of part-time workers.

The new partnership will initially provide restaurant owners and employees with a Web portal to shop for insurance products currently offered by UnitedHealth, the nation’s largest insurer by revenue.

The options would include policies that employers could select if they wanted to provide their employees with benefits, as well as individual plans that restaurant workers could select if their employer did not offer coverage.

UnitedHealth executives said the employer-sponsored plans — including one designed to cover preventive care, routine office visits and catastrophic events, with a gap in coverage in between — could be available for 10% to 20% less than traditional health-maintenance-organization and preferred-provider-organization health plans offered to small businesses.

Customers also may qualify for discounts on other UnitedHealth products, such as dental and vision coverage.

But a UnitedHealth executive, Austin Pittman, said the company would continue its standard underwriting practices, which could include denying coverage to people with preexisting medical conditions. That practice will not be banned until 2014.

Sheryl Skolnick, a veteran industry analyst at CRT Capital Group, said the Minnetonka, Minn., healthcare company deserved credit for trying to serve a group of people who have not traditionally had health benefits. But she cautioned that the promised discounts might be inadequate.

“If this is going to be more than just good public relations, a 10% to 20% discount off the cost of a normal plan isn’t enough,” she said. “This is a relatively low-paid population... and I am concerned that this program may not be innovative enough.”

Sweeney said that as the program develops, the restaurant association hopes UnitedHealth will develop insurance products specifically tailored to help restaurateurs and their employees. That, she said, should bring down costs further.

Executives at UnitedHealth, which also has a partnership with seniors group AARP to offer Medicare supplemental insurance, did not provide details of what they might offer. But Pittman called the partnership “an important opportunity for us.”

The move comes at a time when the nation’s leading insurers have been shedding customers and raising rates in a bid to placate nervous investors. Last year, four of the five largest for-profit insurance companies, including UnitedHealth, lost customers while significantly boosting their earnings, according to company financial reports.

UnitedHealth continues to raise premiums in what is known as the small group market, serving employers with fewer than 50 workers. This week the company filed an application in Rhode Island to raise premiums for small businesses by nearly 12% next year.