WASHINGTON — Retail groups appear to have lost the battle for fewer government mandates in landmark health care legislation that is poised for approval in the Senate.

This story first appeared in the December 22, 2009 issue of WWD. Subscribe Today.

The National Retail Federation and the Retail Industry Leaders Association have lobbied vigorously for changes in the Senate bill, which would assess fees on employers to help pay for workers eligible for government health insurance subsidies and impose other stringent measures to prod businesses into offering health insurance coverage to all employees.

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

The Senate bill is “coal and brambles in our stockings,” said Neil Trautwein, vice president and employee benefits policy council for the NRF.

“Senate negotiators have chosen to ignore the warnings of employers and instead produce a bill that will harm, not help, our members’ ability to continue to offer their employees quality, affordable health care coverage,” said John Emling, RILA senior vice president for government affairs.

Emling called the Senate bill “terribly flawed” and said it made little progress toward reducing health care costs for employers or their employees.

However, President Obama said the Senate’s early morning procedural vote on Monday, which avoided a Republican filibuster and showed that Senate Democrats had the 60 votes needed to revamp the U.S. health care system, was “historic.”

Obama, who has made the legislation the centerpiece of his domestic policy, said, “The Senate has moved us closer to reform that makes a tremendous difference for families, for seniors, for businesses and for the country as a whole.”

The Senate is tentatively set to vote on the legislation on Christmas Eve. The House passed its version of the bill on Nov. 7. Although the measure will clear a major hurdle with Senate passage, the battle is not over. The House and Senate must still enter into conference negotiations to reconcile differences between the two measures — unlike the House bill, the Senate version does not include a government-operated health plan, known as the public option — and each chamber must pass the compromise bill before it can be sent to Obama’s desk.

The legislation, which would cost $871 billion over 10 years, would provide coverage to an estimated 31 million uninsured Americans and cut the federal deficit by more than $100 billion through new taxes and fees, and a slowdown in the growth of Medicare, according to a Congressional Budget Office analysis.

The Senate bill would require companies that don’t offer full-time workers health insurance to pay a government fee to subsidize eligible workers so they can apply for aid to buy insurance in an exchange. Seeking to push employers to provide health care insurance, firms with more than 50 workers would be required to pay a $750 fine for every employee if just one receives a subsidy.

Another stipulation in 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. Retail opponents favor a longer waiting period.

The House 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, payroll taxes 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 having payrolls of less than $500,000, but would assess a “graduated penalty” for not offering coverage for firms with payrolls between $500,000 and $750,000.

“To the NRF, neither bill’s approach is acceptable,” Trautwein said. “They will both impose additional burdens on an industry ill-suited to take on additional labor expenses.”

Retailers on average now cover about 70 to 75 percent of full-time employees’ health insurance and almost 50 percent of part-time employees’ insurance, Trautwein said.

“There is really not a retailer today that could meet the bar the House has set,” Trautwein said, adding that the Senate bill may lay the ground for further employer mandates in the future.

AFL-CIO president Richard Trumka said the union favors the House bill over the Senate’s, arguing it “is the model for genuine health care reform. Working people cannot accept anything less than real reform.”

Trumka said the Senate bill does not do enough to address rising health care costs and puts too great a burden on workers and the country without expanding benefits enough.

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