By  on July 31, 2009

WASHINGTON — The House Energy and Commerce Committee was expected to pass its piece of landmark health care reform legislation today, after striking a compromise on a package that would exempt additional businesses from a requirement to offer health insurance to their workers.

Retailers have been closely monitoring the Congressional process, with a particular focus on employer health insurance mandates, which have pitted Wal-Mart Stores Inc. against a large swath of the retail industry. Most retailers, including the industry’s largest trade group, the National Retail Federation, oppose Wal-Mart’s support of the concept of employer mandates.

House Speaker Nancy Pelosi (D., Calif.), Rep. Henry Waxman (D., Calif.), the panel’s chairman, and the White House worked closely with four fiscally conservative Democrats, known as the “Blue Dogs,” to break the impasse in the third and final House committee to take up health care reform.

As part of the compromise agreement, the exemption level was raised on employer health insurance coverage requirements for small businesses. The revised provision would exempt businesses with payrolls of $500,000 or below from a mandate to provide insurance to employees or pay a penalty, according to a spokeswoman for the Blue Dog Coalition. The existing bill had set the exempt level at businesses with payrolls of $250,000 or below.

The penalty, in the form of payroll taxes, would hit businesses not providing full coverage to employees on a sliding scale before kicking in fully at 8 percent of payrolls above $750,000.

Employers that opt for covering employees would have to cover 72.5 percent of the premium for individuals and 65 percent for family coverage to avoid tax penalties.

The two largest retail industry trade and lobbying groups said the proposed changes in employer mandates were an improvement but still left the broader mandates too onerous.

“Certainly from our perspective, we would see that [an increase in the exemption cap for small businesses] as being helpful but not sufficient to allay our concerns on the overall House bill, which we would continue to oppose,” said Neil Trautwein, vice president and employee benefits policy counsel for the NRF. “We want our new entrants into retail space to prosper and to grow, and we would hope that an artificial carve-out wouldn’t get in their way. We think the overall bill is still severely flawed and would be onerous for retailers of all sizes.”

John Emling, senior vice president of government affairs at the Retail Industry Leaders Association, said, “At first blush, it seems as though it may help a few more small businesses.

“That being said, it still creates a threshold and if you are a smaller business on the verge of growth this [cap] would give you pause to future growth potential,” said Emling. “It could really be an impediment to business investment, growth and the hiring of new employees.”

A Wal-Mart spokeswoman declined to comment on the compromise.

The panel’s passage of a bill today would bring the total number of House committee-approved bills to three and could clear the way for a vote in the full House in September.

Pelosi and other House leaders will have to merge the three panels’ measures before sending a health care package to the floor for a vote.

The Senate is still awaiting action in the Finance Committee on the tax portion of the bill after the Health, Education, Labor & Pensions committee approved its measure last week.

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