Retailers Fret over Health Insurance Costs

 

A retail federation told Congress in early 2009 that merchants are committed to providing health insurance to their employees, but asked lawmakers not to pass measures that would drive up costs for employer-provided coverage (www.house.gov/smbiz/hearings). Retailers would like comprehensive health care reform initiatives that reduce costs but expand access to coverage.

 

As testimony from the retail federation reflected, retailers often endure wafer-thin profit margins and need to manage the cost of labor. The retail industry includes businesses ranging from chain restaurants to internet merchants to grocery stores, and includes 24 million employees, or 1 out of 5 American workers. Ideally Congress will support various pooling mechanisms to facilitate purchasing of coverage, particularly for small businesses.

 

"I would like to focus on our shared goal of strengthening the employer-based health care system,- testified Neil Trautwein of the National Retail Federation.  "Retailers by and large are still committed to this voluntary system, even in tough times like these.  This mix of compensation ... both wages and benefits ... is a key element of how one employer distinguishes itself from another in attracting employees.  But the high cost of care and coverage threatens our future commitment to sponsoring coverage.  We agree with President Obama that the current cost trajectory is unsustainable.  We must bring health care costs back down to earth.-

 

 

Trautwein urged subcommittee members to be suspicious of three reforms likely to be considered by Congress: employer mandates, limits on the Employee Retirement Income Security Act (ERISA), and elimination of or a limit on current federal law that exempts health care benefits from being taxed as employee income.

 

Mandates requiring employers to either provide health insurance or pay into a public health insurance fund could force companies to either reduce jobs or cut wages in order to afford the added expenses.

 

Trautwein said that ERISA is crucial and allows multistate employers to offer common benefit plans across state boundaries.  "We specifically reject the idea that ERISA preemption should only be granted to plans that meet federal minimums on the composition of benefits or the size of employer contributions to plans,- he said.  "Unraveling ERISA would take most of those employer dollars off the table, greatly increasing the cost of reform.-

 

Retailers would support a mandate requiring individuals to obtain health insurance if it included government subsidies to help workers pay the employee share of premiums for employer-provided plans, according to Trautwein. Such subsidies would encourage a maximum number of workers to participate.  Greater participation ... particularly by young, healthy workers ... would, in turn, hold down the average spent per employee and reduce employers" costs.

 

Trautwein said that lowering the underlying costs of health care is the key to making coverage more affordable and reaching the ultimate goal of universal coverage. If health care providers compete on cost and quality, the vision for improved coverage may be realized.