By  on February 23, 2010

WASHINGTON — President Obama outlined a health care reform compromise on Monday that would increase government fees on employers that don’t offer full-time health insurance to subsidize eligible workers applying for aid in an insurance exchange.

Retail groups criticized Obama’s proposed compromise — an effort to resuscitate his signature domestic issue — over employer health insurance coverage requirements, saying they would impose undue cost burdens on companies. The White House estimated the package would cost $950 billion over 10 years, but would be paid for by new taxes and fees on business.

“From an employer’s perspective, if you make a good-faith effort to offer health care coverage and have employees go to an exchange [for coverage], why should you as an employer be penalized?” asked John Emling, senior vice president for government affairs at the Retail Industry Leaders Association. “We need more details about the President’s proposal, but if it is consistent with the Senate bill, it is still problematic for us.”

Under Obama’s proposal, firms with more than 50 workers and not offering coverage would be required to pay a $2,000 fine for every employee if just one received a subsidy. By contrast, the Senate bill that never came up for a full vote in the chamber requires employers that do not offer coverage to pay a $750 fee for every full-time worker receiving subsidies.

Neil Trautwein, vice president and employee benefits policy council at the National Retail Federation, said Obama’s proposals do not resolve the retail industry’s concerns and “in many ways exacerbate them because of higher penalties and the vagueness about coverage for part-time employees.”

Emling and Trautwein both said all the proposals on employer mandates could act as a disincentive for employers to offer health care coverage and actually force them to drop coverage and pay the penalty rather than meet a certain threshold for affordability that could be more costly.

Employer mandates have divided the retail industry. Although a large swath of the industry, including the NRF and RILA, oppose them, Wal-Mart Stores Inc., the largest U.S. employer, supports mandates.

Health care reform legislation stalled in Congress this year after Republicans maintained unanimous opposition to it and Democrats lost a seat in the Senate in a special election that took away their filibuster-proof super majority.

In an effort to minimize the cost for employers, the new proposal would allow employers with more than 50 workers to deduct the first 30 workers receiving subsidies from the payment calculation “to improve the transition to the employer responsibility policy.”

In addition, the President’s proposal would appear to give employers a 90-day limit, the time period for which retailers lobbied, on the length of any waiting period to enroll employees into health plans, beginning in 2014. The Senate bill would require companies to provide health care insurance coverage to full-time workers within 60 days of the hire date or face penalties.

Small businesses would receive $40 billion in tax credits to support coverage for their workers beginning this year and firms with fewer than 50 employees would be exempt from any employer responsibility requirements.

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