WASHINGTON -- The Patient Protection & Affordable Care Act (ACA) often called "Obamacare," is posing serious challenges for many convenience industry wholesalers, many of whom are small, family operated businesses, the chairman of the American Wholesale Marketers Association (AWMA) said Wednesday in testimony submitted to the Senate Small Business Committee.
Hugh W. Raetzsch Jr., president of Lyons Specialty Co., LLC/AA Vending, Port Allen, La., told the committee that his company may be forced to reconsider its current policy of providing health insurance coverage to its fulltime employees as a result of uncertainties, complexities and additional costs stemming from the ACA.
Raetzsch said that Lyons Specialty Co., which serves about 550 convenience store retailers in Louisiana and Mississippi, pays 75% of the premium for its fulltime workforce of 85 professional and hourly employees, and that about half of those workers take advantage of the opportunity.
"At Lyons, we believe providing a good health insurance option for our employees is the right thing to do--both from a business and personal standpoint. It puts us in a sound competitive position when we are seeking new employees and helps reduce costly turnover. Most of my AWMA colleagues feel the same way," Raetzsch said.
"But we are facing some serious challenges as a result of the ACA. The unknowns have been recounted time and again, and they continue to complicate the issue for us," he said, pointing to the unknown cost of compliance and questions surrounding the details of what companies like Lyons need to do to comply.
"I promise you, we do not have office personnel sitting around and waiting for more work; nor are they skilled in this area," he said. "Must we hire a consultant to manage this? What will that cost?"
Raetzsch pointed out that the convenience industry distributors operate on a tiny profit margin, often 1% or 2%. "For some companies in our industry, adding unknown additional costs could literally mean the difference between survival and continuing to provide jobs and shutting their doors, putting valued employees--many of whom are moms and dads with kids to support--out of work."
Lyons leaders must make a decision whether to continue the current health plan and pay up to $150,000 annually in additional costs or to cancel it and direct employees to the health exchange to be created by the ACA. Even by paying penalties that would result, the cost would be far less, he said.
But Raetzsch said Lyons does not like that idea, fearing it would lose the ability to hire the best employees to whom health care benefits are important. In addition, he said, the company is concerned about the impact such an action would have on the company's employees and their families.
"At our company, and in many convenience distributorships across America, we are trying to do the best we can for our employees," said Raetzsch. "And … we have not needed a directive from the federal government to do so."
The AWMA is a trade organization working on behalf of U.S. convenience distributors. Its distributor members represent more than $85 billion in U.S. convenience product sales. Associate members include manufacturers, service providers, technology companies, brokers, retailers and others allied to the convenience retailing industry. In addition to c-stores, their largest customer segment, convenience distributors also service grocery stores, drug stores, tobacco shops, mass merchants, newsstands, concession stands, gift shops, fundraising groups, restaurants, institutions and more.
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