Survey: Reform threatens retail, hospitality

Back to TopCommentsE-mailPrintBookmark and Share

When the lion’s share of the health care reform provisions take effect in 2014, the industries expecting to take the biggest hits are retail and hospitality.

Nearly half of employers in the sectors expect the Patient Protection & Affordable Care Act to boost their health plan costs more than 3 percent that year, according to a survey released last week by Mercer, the New York-based benefits consultant.

The concerns among retailers, restaurants and hotels are far different than in other industries, such as manufacturing, financial services, transportation and government, where only one-third to one-quarter of companies expect to see cost bumps of 3 percent or more due to health care reform.

“With health benefit cost already rising at twice the rate of general inflation, an additional increase of 3 percent or more will be very tough for employers to absorb,” Sharon Cunninghis, leader of Mercer’s health and benefits business, said in a prepared statement.

The 2010 health reform law, championed by President Obama, in 2014 will require all employers with more than 50 workers to provide health insurance to their employees, or pay a penalty. Also, all Americans must obtain health coverage or pay a tax.

For companies with 100 or fewer workers, the law will also create government-run insurance exchanges through which workers can obtain subsidies to help purchase private health insurance. Those exchanges will somewhat standardize the benefits of insurance in order to make comparison shopping easier.

One further complication for retail and hospitality businesses is their large number of part-time employees. The health reform law requires employers to provide health benefits to any employee working 30 hours a week—meaning many more of those workers must be on the company health plan.

But according to Mercer’s survey, two-thirds of those employers are considering changes to their plans that would ensure more of their part-timers don’t qualify for health benefits.

Since retailers and hospitality companies also have lots of low-wage workers, they expected some of their workers to receive coverage under the health reform law’s expansion of Medicaid coverage to all adults making up to 133 percent of the federal poverty limit.

But after the U.S. Supreme Court ruled that state governments could opt out of this expansion—and several have vowed to do so—the companies’ low-wage workers could be left in the cold. Providing health coverage to them is potentially more expensive than coverage for higher-wage employees, because the health reform law limits the percentage of workers’ income that can be contributed toward health benefits.

“Extending coverage to more employees will be a significant new expense for these employers,” said Tracy Watts, Mercer’s U.S. health care reform leader, “especially because other provisions regulate how much an employer can require employees to contribute to the cost and how good the coverage must be.”

Overall, 37 percent of employers surveyed by Mercer expect the 2014 health law changes to drive up costs more than 3 percent. One in five employers expects costs to rise 5 percent or more.

About 27 percent of employers expect costs to rise 2 percent or less, and 10 percent expect costs to rise not at all in 2014. The rest of employers said they do not know how much the new requirements will raise costs.


  • Obamacare
    3% increase....really? As it is said "What planet are you from" to the survey takers. That is pure krap. Expect 15% minimum increases plus the wealth tax, unrealized income tax, being one of the few that pay income tax tax, etc etc etc.

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.