WASHINGTON, D.C. -- In what is being considered a disappointing result for retailers, but a big victory for the Obama Administration, the U.S. Supreme Court ruled by a 5-4 vote today that the Affordable Care Act (ACA) -- also known as Obamacare -- is constitutional.
As CSNews Online previously reported, while a lot of focus has been on the individual mandate portion of the health care reform, the retail community is more concerned with the act's employer mandate and what effect it will have on employer-sponsored health care coverage. The ACA lays out regulations that will go into effect in 2014.
Under the reform, states will be responsible for establishing exchanges that will create a marketplace for the purchase of health care insurance. Individuals will be required to have health care coverage or pay a penalty.
All businesses with more than 50 full-time-equivalent workers (30 hours or more) will be required to offer coverage or pay a $2,000-per-person penalty for the first 30 employees. Insurance will be available to employees following a waiting period of 90 days. The mandate also includes new reporting requirements for businesses with more than 50 employees.
In its decision today, the Supreme Court also ruled that insurance companies cannot discriminate against Americans who have pre-existing conditions, and that children can stay on their parents' insurance policy until they turn 26.
Not all of the ACA was upheld, however. One provision requiring an expansion of the Medicaid program to more of the poor was ruled as unconstitutional.
Regarding the employer mandate, various reports indicate that a significant percentage of employers will eliminate employee health plans after 2014 because the $2,000-per-worker penalty would be less expensive than what most companies pay for the average health insurance plan.
Retail organizations expressed widespread dismay with the Supreme Court's ruling.
"For NACS, the health care debate was very focused," said NACS Chairman Tom Robinson. "Rather than engaging on the broad tenants of whether the gov¬ernment should or should not be in¬volved, we focused directly on the effects that mandate would have on con¬venience retailers, and today's ruling is bad news for our members.
"We are well aware that the country's health care system is broken and requires a serious overhaul," Robinson continued. "We will continue to support common-sense reform to make the system more efficient and eliminate waste and fraud, but today's decision is a step in the wrong direction."
National Retail Federation (NRF) President and CEO Matthew Shay echoed this sentiment. "As the voice of retailers of all types and sizes, we're disappointed by today's ruling," he said. "The Court missed an opportunity to redress the many shortcomings of the law. As it stands, the law wrongly focuses more on penalizing employers and the private sector than reducing health costs. For these reasons, NRF has been a consistent skeptic of the Affordable Care Act.
"Although the Court upheld the law's constitutionality, many problems remain: it penalizes employers too much; it doesn't do enough to reduce the cost of health care; and it is unreasonably complicated and difficult to implement and administer," Shay continued. "This law will have a dramatic, negative impact on every employer and employee in the United States and further constrain job creation and economic growth."
Sandy Kennedy, president of the Retail Industry Leaders Association (RILA), also issued a statement. "While retailers are committed to continuing to provide health coverage to their employees, overregulation jeopardizes their ability to do so," Kennedy said. "RILA continues to urge the Administration to protect retailers' ability to offer quality, affordable coverage that fits the unique needs of their workforce and not to undermine the flexible, voluntary system that provides coverage to millions of employees and their families."
Meanwhile, The Food Marketing Institute (FMI) said in its statement that several things must still be sorted out.
"As employers, food retailers will need to follow government agencies' yet-to-be-released criteria for determining which employees are required to be offered health coverage under [ACA] and whether that employer-offered coverage, as required under the new law, is deemed 'affordable' and passes the 'minimal value' requirements in the statute," said FMI President and CEO Leslie G. Sarasin."Within the coming 18 months, federal agencies must issue new regulations covering all of these issues and more, and each company across the industry will be forced to decide how best to adjust its health coverage and work schedules, to comply with the new law -- or whether to simply withdraw from offering coverage and pay any penalties that may be required."
Job loss and business failures among low-margin, service-sector businesses will result from the ACA, according to The Profit Per Employee (PPE) Coalition, which also expressed dismay with the Supreme Court's ruling. "Simply put, when a hotel or restaurant is driven out of business because they can't afford to provide health care benefits or the government penalties, everybody suffers: workers, employers and customers," said Joe Kefauver, executive director of the PPE Coalition.
Republican Presidential nominee Mitt Romney has already gone on record to say that if elected in November, the ACA would be first on his list to overturn.
"On my first day of office, I will act to repeal Obamacare," Romney said during a speech today. "The Supreme Court ruled Obamacare is not unconstitutional. It did not rule that it is good law. Obamacare was bad law yesterday. It is bad law today."
For his part, President Obama said during a speech this afternoon that he understands the concerns many Americans have about the ACA. "I didn't do it because it's good politics. I did it because it's good for Americans … When we look back at this decision in five, 10 or 20 years from now, we will be better off."
To protect its convenience store members, NACS announced that it has convened a small group of members from the NACS Board of Directors to serve on a health care task force that will review legal counsel's analysis of the Supreme Court's decision.
"Ultimately, this group will help ensure that the convenience and fuel retailing industry is properly positioned as the health care issue plays out before the November elections and beyond," NACS said in its statement.