WASHINGTON — Major retail groups were critical of an $894 billion bill unveiled by House Democrats on Thursday that would overhaul the health care system and require payroll tax penalties for uninsured workers.

This story first appeared in the October 30, 2009 issue of WWD. Subscribe Today.

House Speaker Nancy Pelosi (D., Calif.) and Democratic leaders spent months merging three House committee bills and might vote on the legislation next week.

The National Retail Federation and the Retail Industry Leaders Association both expressed reservations about the House bill, which President Obama hailed as a “historic step forward.”

“I think to a large extent we are now in a position to flatly oppose the House bill,” said Neil Trautwein, vice president and employee benefits policy council for the NRF. “It’s a bill that will not bring us any relief from rising health coverage costs and instead will burden the business community in a way that will challenge retailers and restaurateurs the most.”

John Emling, senior vice president of government affairs at RILA, said the organization was “disappointed” by the legislation.

“It looks at first blush that they really ignored the concerns the business community brought forward,” he said. “If a business does not currently offer health care coverage, one reason may be that it simply cannot afford to,” adding there will potentially be significant payroll cost increases for merchants.

RILA is also concerned about a requirement that would force retailers to enroll new employees into their health care plans on the date of hire.

Wal-Mart Stores Inc., which is a RILA member but supports business paying for employee health care, did not return a call by press time.

The bill gives companies the option of providing health insurance to all full-time and part-time employees or, if they decide not to take part, paying higher payroll taxes that would be used to provide benefits to workers left uncovered. The payroll taxes would be 8 percent for firms with annual payrolls above $750,000.

Employers that choose to cover workers would have to pay 72.5 percent of the premium for individuals and 65 percent for family coverage to avoid penalties. The legislation would exempt small businesses, defined as payrolls below $500,000, but would assess a “graduated” penalty for not offering coverage for firms with payrolls between $500,000 and $750,000.

The Senate must still merge two committee proposals into one bill and vote on its version of the health care measure. The House and Senate would then have to produce and pass a compromise bill to send to Obama for his signature.

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