“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,” says NACS chairman.
The Supreme Court upheld President Barack Obama’s 2010 health care law Thursday, June 28, 2012, MSNBC Online reported.
The ruling allows the government to continue implementing the health care law, which doesn’t take full effect until 2014.
The decision came as a disappointment to congressional republicans, many of whom anticipated that at least part of the law would be struck down as unconstitutional.
Despite the official ruling, the debate over health care continues. Republicans are vowing to continue the fight against the law. Republican presidential nominee, Mitt Romney, has vowed to undo the health care mandate if elected.
Passed in 2010, the law aims to expand both the private market and Medicaid and is intended to end the United States’ status as the only wealthy country with large numbers of uninsured citizens.One key part of the law—known as the individual mandate— that the 26 states opposing the law challenged, requires all citizens to buy health insurance meeting minimum federal standards or to pay a fine if they fail to do so. Many conservatives considered the mandate unconstitutional, arguing that if the federal government could compel people to buy health insurance, it could compel them to buy almost anything, the New York Times reported.
In a 5-4 ruling, the Court decided the individual mandate requiring people to have health insurance is valid as a tax, even though it is impermissible under the Constitution’s commerce clause, CNN reported.
C-Store Impact
Today’s complex ruling by the U.S. Supreme Court that the Patient Protection and Affordable Care Act is constitutional is damaging to the nation’s 148,000-plus convenience and fuel retailers, said NACS Chairman Tom Robinson, president of Santa Clara, Calif.-based Robinson Oil Corp.
“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,” said Robinson.
The Supreme Court’s decision also effectively continues the mandate for menu labeling, which the convenience retailing industry opposes.
“We are well aware that the country’s health-care system is broken and requires a serious overhaul,” said Robinson. “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.”
The restaurant industry also voiced concerns. “Today’s decision will impose costly burdens on the chain restaurant industry, thousands of small business franchisees and their employees,” said The National Council of Chain Restaurants (NCCR) Executive Director Rob Green. “The Affordable Care Act (ACA) imposes heavy mandates on employers using punitive penalties for non-compliance. The law will particularly damage the chain restaurant industry, which operates on thin margins and cannot support costly government imposed mandates. Many chains have indicated they will have no choice but to cut back on workers’ hours or close restaurants in order to avoid the penalties.”
“NCCR opposed the ACA and has advocated instead for reforms that expand access through lower costs. In 2009, Congress and the president went about health care reform the wrong way. Instead of making health insurance more affordable, they focused on unrealistic mandates and penalties that do nothing but punish employers and weigh down the economy,” he added.
Gus Olympidis, president & CEO of Family Express convenience stores told Convenience Store Decisions it’s too early to know what is ultimately going to happen with healthcare, and what the impact of this ruling is going to be on the November election.
“This decision could bring about enough shifting to change the course of the election,” Olympidis noted. “As far as the industry at large, we have felt for quite some time that the industry is going to get two bites of the apple: One was the Supreme Court decision and one remains the November election. Our decision is to keep things on hold until such time until these two major opportunities for a radical realignment have been decided.”
Olympidis noted that conventional wisdom was if the Supreme Court overturned even the mandate component of Obamacare, the Obama Administration would be facing a major defeat that could extend to the November election. “I think the opposite may be true. I think the losing side is going to be more motivated and more inclined to coalesce in search of making the best of the final option on healthcare, which is the November election,” he said.
As far as the c-store industry, specifically, Olympidis predicted that if the ruling stands, it could present an even further dichotomy between the small operators and the larger companies.
Small operators would find themselves effectively excluded from the rules, while most large operators will likely opt to pay the fine. “Today, health insurance in our company is a differentiator. It’s one of those things that causes an outstanding prospect to come to Family Express, and it is going to be difficult to maintain that long-term because the economic dynamics of transitioning to the government plan is very compelling. The whole system was designed to get companies to bail out of their current plan, especially if it is a rich plan, and transition onto the government plan.”
To avoid fines for non-compliance, if healthcare reform remains, the industry could see a resurgence in franchising. “Everyone’s business model is going to have to be recalibrated in the context of these costs being present verses not,” Olympidis 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,” said The National Retail Federation (NRF) President and CEO Matthew Shay.
“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. NRF worked closely with lawmakers throughout the debate with the hopes that bipartisan reform would help make coverage more accessible and affordable. 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.”
Shay noted that 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 U.S. and further constrain job creation and economic growth,” he said. “NRF will redouble our efforts to repeal the law while we continue to work, in good faith, with regulators to smooth implementation for retailers and businesses alike.”
“Regardless of today’s ruling, Kum & Go remains deeply committed to our associates’ well-being,” noted Kum & Go President and CEO Kyle Krause. “We will continue to keep that focus in mind as the Federal Health Care Law is enacted and its impact is evaluated by our industry.”
The National Coalition of Associations of 7-Eleven Franchisees, representing nearly 5,000 small businesses across the country, noted it is disappointed by the Supreme Court decision upholding employer mandates in the Patient Protection and Affordable Care Act. “While the details of this ruling still need to be examined, we believe this mandate is bad for small business. In addition, other issues in the Act, namely the far-reaching and nonsensical menu labeling requirement provisions, are equally as troubling to the convenience store industry,” said Chairman Bruce Maples.
