Social policy on the menu

But this winter a controversial new item has been showing up in the fine print of menus at some of the hottest restaurants: a surcharge to help pay for worker health insurance.

In the hip South of Market neighborhood, the menu at Tres Agaves, a popular Mexican restaurant and tequila bar, has a small message at the bottom of the first page that says, "3.5% service charge will be added to all checks for the San Francisco affordable healthcare legislation."

At issue is the city's new effort, kicked off Jan. 9, to provide healthcare for all residents. Since then, employers with more than 20 workers are required to spend a minimum amount on health insurance, set aside money in health reimbursement accounts or pay a fee to the city's Healthy San Francisco program.

A big city jumping into universal healthcare is unprecedented. The program is being watched closely as officials from Sacramento to Washington struggle to invent ways to provide and pay for care for the uninsured.

Restaurant patrons so far don't seem to mind footing the bill for expanded healthcare. "We haven't noticed it, so I guess it's not that big a deal," said Stacy Wong, a Tres Agaves customer waiting with friends to lunch on Jalisco-style fish tacos.

But restaurateurs are irate, saying they eke out livelihoods on profit margins as slim as two pennies on the dollar. The program is burdensome for the city's 4,200 eateries, and their trade group has filed suit to stop it.

Thousands of other small to medium-size businesses, which hire many low-wage and part-time workers, also complain about the healthcare mandate's cost and are hoping that the restaurant association wins its lawsuit, said Scott Hauge, a San Francisco insurance broker and president of Small Business California, an advocacy group.

"There's no doubt that the restaurant industry is going to survive in San Francisco," even with higher health costs, said restaurant consultant Joan Simon. Medium-size cafes and bistros will need to get "leaner and meaner," while "the larger restaurants, the 'destinations,' will raise rates and do fine."