WASHINGTON — Industry trade associations said last week the sweeping health care reforms that were signed into law last week will add to food retailers' costs of doing business.
“This legislation as a whole does not provide the tools to help fix and improve the ability of employers to offer affordable coverage to their employees and presents additional challenges unique to supermarkets,” said Jennifer Hatcher, group vice president of government relations for Food Marketing Institute, Arlington, Va. “Rising health insurance costs present a tremendous challenge for the labor-intensive supermarket industry.
“This was a unique opportunity to solve an important problem, [but] this legislation does not effectively address the rising costs of health insurance and is likely to make it more expensive for supermarkets of all sizes to provide quality and affordable health care coverage to their valuable and committed associates.”
The National Grocers Association, also based in Arlington, said it was disappointed that Congress “did not pass more balanced and cost-effective health care legislation.”
In a statement released to SN, the association said, “While NGA agrees that reform is needed, this law will have substantial and negative consequences for retail and wholesale grocers and their employees, who will face future employer mandates for health insurance coverage that will force them to balance between high insurance costs and jobs for employees.”
NGA listed five specific elements in the legislation it believes will have a direct negative impact on retailers and wholesalers:
--New mandates on businesses to provide health insurance for fulltime employees and their dependents, with what NGA considers unfair penalties for violations of the law.
--New fees and taxes that could unfairly burden small-business owners and increase the cost of health care coverage “while effectively doing nothing to increase competition and lower the cost of health insurance.”
--New taxes on small businesses, many of which are organized in corporations where store income flows through personal tax returns.
--Restrictions on Flexible Health Spending Accounts purchases, “which limit the choice and ability of consumers to obtain affordable OTC treatment options.”
--Automatic enrollment for employers with 200 or more employees, “which will create enormous administrative burdens and significant costs for an industry with a very high turnover rate of part-timers, often 100%.”
The National Retail Federation, Washington, said the new legislation will add labor costs that could result in job losses for many retail workers.
“Many businesses already struggling to keep their doors open may not be able to withstand this added financial burden,” Steve Pfister, senior vice president, government relations, said. “Retailers have told Congress all along that we need reform that will lower costs. Instead, we've been handed employer mandates that do just the opposite while doing little or nothing about the cost of medical care, which in turn drives higher coverage costs.
“We are particularly concerned about midsized companies that are large enough for the mandates to apply but too small to have the ability to absorb these added costs. And small businesses that drive so much of the job creation in our country are going to be forced to hold their size under 50 workers to avoid the employer-mandate threshold.
In a speech to a group of investors in New York last week, David C. Dillon, chairman and chief executive officer of Kroger Co., Cincinnati, said he doubts the new legislation will make much difference for his company.
“We support the idea of health care reform and an increase in the number of Americans covered, but the new law won't have much impact on us,” he said. “For one thing, most of our associates already qualify for health insurance that we pay for. We've believed for a long time health care for associates is important, and we don't think the new law will produce any radical changes.
“In addition, any changes that do affect us will also affect others in the industry, so we don't think it will impact us in any way competitively.”
The Coalition to Advance Healthcare Reform, of which Safeway is a member, took a more positive position on the legislation that was passed last week. “While this legislation is far from perfect, it does make some important strides forward on several of CAHR's core principles,” Darren Willcox, executive director of CAHR, said.
The coalition said it believes successful health care policy reform needs five core elements: market-based health care; universal coverage with individual responsibility; financial assistance for low-income people; healthier behavior and incentives; and equal tax treatment for businesses and individuals.
Joe Hansen, president of the United Food and Commercial Workers International Union, called passage of the legislation “an achievement that will rank among the highest in our national experience.”
“For the countless hard-working families across the country suffering at the hands of our nation's badly broken health care system, the passage of this bill represents an unprecedented leap forward in the struggle to ensure all Americans have access to affordable health care.”
The National Association of Chain Drug stores said it was not happy with the complete bill but applauded the inclusion of three provisions it had advocated:
--A series of grant and pilot programs that encompass medication therapy management.
--Reductions in the cuts to Medicaid pharmacy reimbursements it felt would have jeopardized patient care under the average manufacturer's price model, “[which] are essential to achieving a better approximation of pharmacies' costs for purchasing generic drugs.”
--A conditional exemption for pharmacies from the durable medical equipment Medicare accreditation requirements, which would help maintain seniors' access to needed products, NACDS said.