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Healthcare Coverage Hangs in the Balance
A proposed amendment would protect employers from providing health coverage for the first 90 days, but the legislation's future is unknown.
A pending senate bill would levy fines on small business owners for failing to offer healthcare coverage to employees after 30 days.

Senator Mary Landrieu, D-La., “might have to compromise” on a proposed amendment that would give employers 90 days to start offering healthcare coverage before facing penalties, according to Vicki Ekstrom, press secretary for Sen. Landrieu’s small-business committee.

As it stands, the Patient Protection and Affordable Care Act, sponsored by Senate Majority Leader Harry Reid, D-Nev., would fine employers $400 after 30 days for not covering their employees. The fine rises to $600 if after 60 days employees remain ineligible for coverage.

Landrieu proposed her amendment last week after an outcry from the small-business community, Ekstrom says. Employers in industries with high turnover rates, like the restaurant industry, do not want to have to offer coverage to employees who might leave after a few weeks.

“With the economic downturn, these industries are operating with a thinner profit margin than usual,” Ekstrom says. “In the restaurant industry, where there is a lot of turnover, this specific amendment would help greatly.”

But Landrieu’s amendment would, in effect, increase the cost of the Act by eliminating fines for 90 days, meaning it might not make it through the Senate in its current form—or at all.

“Because there is a cost associated with the amendment, [Sen. Landrieu] might have to compromise because we’re trying to keep the cost of legislation low,” Ekstrom says.

Landrieu is willing to compromise on the length of the grace period, perhaps reducing it to only 60 days, “as long as there is a sound policy justification for doing so,” Ekstrom says.

In the end, none of Landrieu’s proposed amendments “are make or break for her,” Ekstrom says. The paramount goal is passing healthcare legislation.

“We need reform now,” Ekstrom says. “There’s a lot of people who agree this amendment is something that needs to get done, but because of the cost we need to weigh the benefits.”

Landrieu’s amendment received a strong endorsement from the National Restaurant Association. In a statement released last week, NRA president and CEO Dawn Sweeney called it a “pro-restaurant amendment.”

“Due to the restaurant industry's average annual turnover rate of 75 percent of the workforce, a 90-day waiting period is critical,” Sweeney said in the statement. “Restaurateurs want to offer affordable health coverage for our employees and lower the cost of that coverage. By allowing a 90-day waiting period, restaurant operators will be able to keep the cost lower for premiums of their employees that stay with the restaurant long-term.”

The National Retail Federation, which represents the National Council of Chain Restaurants, also endorsed the amendment. But it does not support the broader legislation, says Neil Trautwein, NRF vice president and employee benefits policy counsel.

By allowing a 90-day waiting period, restaurant operators will be able to keep the cost lower for premiums of their employees that stay with the restaurant long-term.”

“Inclusion of the Landrieu amendment is not sufficient to encourage us to support the underlying Reid bill,” Trautwein says.

He called the legislation “unsustainable” and “unnecessarily punitive to employers.”

But the Landrieu amendment does address the NRF’s concern about having to cover employees right away.

“Particularly in the chain-restaurant area, where turnover rates are extraordinary, you might have someone come in, work for 30 days, and depart,” he says. “The challenge of maintaining a health-care plan with a revolving door would just be very difficult to manage.”

Landrieu’s amendment is cosponsored by Senators Jeanne Shaheen, D-N.H.; Olympia Snowe, R-Maine; Blanche Lincoln, D-Ark.; and Mark Warner, D-Va. It is being analyzed by the Congressional Budget Office.

Jordan Melnick is QSR's online exclusives reporter.