Health Care Decision Draws Widespread Criticism

Industry groups see upholding of insurance mandates as "bad news" for retailers

Greg Lindenberg, Editor, CSP

WASHINGTON -- Following the 5-4 vote by the U.S. Supreme Court yesterday that said the Patient Protection & Affordable Care Act, which its detractors call "Obamacare," is largely constitutional, retail and restaurant associations raced to release statements expressing their disappointment with the decision.

Justices Elena Kagan, Sonia Sotomayor, Stephen Breyer and Ruth Bader Ginsburg voted to uphold the mandate requiring individuals to purchase health insurance. Justices Antonin Scalia, Clarence Thomas, Samuel Alito and Anthony Kennedy voted against it. Chief Justice John Roberts voted with those upholding the legislation.

The court said that while the individual mandate was not allowed under the Commerce Clause of the U.S. Constitution, because there is a financial penalty for not purchasing health insurance under the Affordable Care Act, that it is considered to be a tax; therefore, the court ruled that the individual mandate was upheld under Congress' ability to tax.

President Obama and Democratic leaders denied that the mandate was a tax when it was being debated in Congress.

Also, the court said that the rules expanding the number of people who qualify for Medicaid is constitutional, but that it would be unconstitutional to withhold Medicaid funds from states that do not comply.

In a joint statement, the dissenters said, "The act before us here exceeds federal power both in mandating the purchase of health insurance and in denying nonconsenting states all Medicaid funding."

Kennedy, speaking in court, summarized the dissent by saying, "In our view, the act before us is invalid in its entirety," said an Associated Press report.

Click here to read the full text of the Supreme Court decision.

Industry associations weighed in with thier official statements:


Dan Gilligan, president of the Petroleum Marketers Association of America (PMAA), told CSP Daily News, "Like all the trade associations with retailer and small business members, PMAA is very disappointed with today's Supreme Court ruling. The new health care law places an unfair and devastating financial burden on small businesses like convenience stores, restaurants, grocers and similar retail operations. The employer mandates in the health care law are real job killers because the cost of filling an entry level position will escalate dramatically. If the President and the next Congress truly wants to do something about jobs they must fix the employer mandates and PMAA will be lobbying aggressively for those fixes."


As reported in a Raymond James/CSP Daily News Flash shortly after the decision was announced, NACS chairman Tom Robinson, president of Santa Clara, Calif.-based Robinson Oil Corp., said the act is damaging to the nation's 148,000-plus convenience and fuel retailers.

He added, "The court's decision to keep in place employer mandates will place significant burdens on nearly 40% of our industry and put these businesses at a substantial competitive disadvantage."

He noted that the court's decision also effectively continues the mandate for menu labeling, which the convenience retailing industry opposes.

"For NACS, the health-care debate was very focused. Rather than engaging on the broad tenants of whether the gov­ernment should or should not be in­volved, we focused directly on the effects that mandate would have on con­venience retailers, and today's ruling is bad news for our members," said Robinson.

"We are well aware that the country's health-care system is broken and requires a serious overhaul," he said. "We will continue to support common-sense reform to make the system more efficient and eliminatewaste and fraud, but today's decision is a step in the wrong direction."


Matthew Shay, president and CEO of the National Retail Federation (NRF), said, "As the voice of retailers of all types and sizes, we're disappointed by today's ruling. 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."

He added, "The law that emerged in 2010 was a controversial and partisan measure riddled with punitive mandates and penalties that were as unreasonable as they were unworkable.

"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.

"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."


Retail Industry Leaders Association (RILA) president Sandy Kennedy said, "With the Supreme Court decision now behind us, the focus must turn to the employer-mandate and the effect that impending changes to employer-sponsored coverage will have on the nearly 170 million Americans who receive healthcare through their employer.

"President Obama repeatedly assured Americans that if they liked their health insurance, they could keep it; however, today, with just 17 months until the law takes effect, and no meaningful implementation guidelines available for employers, those assurances are in doubt.

"While retailers are committed to continuing to provide health coverage to their employees, overregulation jeopardizes their ability to do so."


Food Marketing Institute president and CEO Leslie G. Sarasin, said, "Today's Supreme Court ruling upholds PPACA's multitude of reporting requirements and mandates for food retailers and wholesalers to offer health coverage to their employees. As employers of millions of full-time, part-time and seasonal workers, uncertainty still remains for food retailers in every community in this country.

"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 PPACA and whether that employer-offered coverage, as required under the new law, is deemed 'affordable' and passes the 'minimal value' requirements in the statute. 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.

"In addition, there [is a provision] in PPACA that specifically impact the grocery industry: a restaurant menu labeling requirement that was incorporated into the legislation just prior to its passage followed by a proposed rule from FDA that could expand to supermarkets the regulations intended for restaurants."


International Franchise Association (IFA) president and CEO Steve Caldeira said, "We are deeply disappointed by the High Court ruling to uphold the Affordable Care Act, which places undue burdens on the franchise small business community. While it may have been ruled constitutional, the law is unworkable, unaffordable and wrong for our country's small business owners who continue to struggle in a still sluggish economic climate. By upholding the law, 3.2 million jobs at franchise businesses continue to be put at risk due to the employer mandate provision, thereby discouraging and disincentivizing the creation of new jobs and business expansion.

"The Affordable Care Act, and specifically the employer mandate, does not provide solutions to the cost and access issues it set out to address, but rather hurts the employees it aims to assist."


Dawn Sweeney, president and CEO of the National Restaurant Association (NRA), said, "Today's ruling by the Supreme Court is troubling for restaurant operators and business owners across the country. We encourage Congress to continue efforts to repeal the law, since the Court's decision leaves the employer requirements in place, provisions which impact restaurant operators' ability to grow and create jobs."

Based on the Supreme Court's ruling to uphold the law, employers with 50 or more full-time equivalent employees must offer "affordable" health insurance of minimum value to full-time employees and their dependents or pay penalties. The cost of such coverage or the penalties could threaten the very slim profit margin on which most restaurants operate.

"This unworkable law cannot stand as is," said Sweeney. "We need reform that addresses the increasing costs our members are faced with each year. Restaurant owners are looking for solutions that will allow them to provide better health care coverage options for their team members, but they cannot be saddled with excessive costs and regulatory burdens that threaten their very business. We ask members of Congress to take action that helps the restaurant industry continue to help create jobs and grow the national economy."