By  on February 9, 1994

"...individuals, not the government, should be free to make choices on the type of health care coverage they wish to obtain and the doctor they would like to see."
-- Charles Siegel, 50-Off Stores

WASHINGTON -- Two mass merchants are taking a leading role in the retail industry's battle against certain health care reform proposals.

Bernard F. Brennan, chief executive officer of Montgomery Ward & Co., and Charles Siegel, ceo of 50-Off Stores, told a House panel last week that employer mandates in health care reform would have disastrous consequences for the retail industry.

"No issue is of more significance to retailers," Brennan told the House Ways and Means Committee. "Whatever is done will have enormous impact on retail."

Brennan testified on behalf of the National Retail Federation. He took the reins as new chairman of the trade group at its annual convention in January. Siegel spoke for the International Mass Retail Association. He is a member of IMRA's board.

Retailers joined the opposition to employer mandates early in the debate, and their arguments gained momentum last week when major business groups, including the Business Roundtable, came out against President Clinton's proposal that employers pay 80 percent of health care premiums for all workers -- full-timers and part-timers.

House Majority Leader Richard Gephardt (D., Mo.) turned up the heat Friday on congressional Republicans, who are almost unanimous in their opposition to employer mandates. Gephardt blamed business opposition to Clinton's plan on Republicans who "twisted their arms...and twisted the facts in the process."

The debate is likely to get uglier. Brennan and Siegel faced criticism from members of the House Ways and Means Committee for their opposition.

"I know that most retail workers have a primary job that provides them with health care coverage," said Rep. Sam Gibbons (D., Fla.). "If Mr. Brennan says his folks are taken care of and he wants to keep it that way, I can't blame him for not wanting to pay mandates. But somebody has to pay for it. You'll either get mandates or taxes or we'll end up keeping the current system. But something will be done this year."Rep. Jim McDermott (D., Wash.), sponsor of a health care reform package that would require payroll taxes, criticized the retailers for saying they "can't do what every other country is doing."

"I want you to tell me why America is so weak and uncreative that the business community will walk out of here and say it can only provide access," McDermott said. "Everyone else has done it."

Retailers believe, Siegel said, "that individuals, not the government, should be free to make choices on the type of health care coverage they wish to obtain and the doctor they would like to see."

Employer mandates disproportionately impact retail, Brennan said, because of the high number of workers, especially part-time. A survey of 10 retailers employing a total of 1.3 million people revealed that during the first four years under Clinton's reform, health care costs could rise an average of 89 percent per year or more, Brennan said.

"Of all the major industries, the retail sector would experience the greatest percentage increase in the number of workers who would become insured by their own employer under an employer mandate," the Ward's leader said.

He estimated that more than 500,000 retail jobs nationwide would be lost and that Ward's would have to eliminate 5,000 to 10,000 jobs if universal coverage were mandated. It would be difficult to absorb higher health care costs by raising the cost of merchandise, Brennan said, because retail currently is experiencing "deflation" as it lowers prices to compete.

Siegel predicted that retailers would consolidate part-time jobs into full-time jobs. Attempting to track part-time workers to determine their health care payments would be an "administrative and compliance nightmare," he said.

Brennan pointed out that because store traffic is heaviest from 2 p.m. to 9 p.m., many full-time workers would have to work evening hours or split shifts, which could discourage employment.

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