Survey: Reform threatens retail, hospitality

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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.

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  1. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

  2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

  3. Maybe they shouldn't be throwing money at the IRL or whatever they call it now. Probably should save that money for actual operations.

  4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

  5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...