Distributors

Distributors face ‘uncertainty’ on health care reform law

Last Wednesday, the U.S. House of Representatives voted to repeal the Affordable Care Act. That same day, electrical distributors from across the country were in Washington, D.C. as part of the National Association of Electrical Distributors (NAED) 2012 Congressional Fly-In event. Health care reform was top of mind for the group of small-business owners and employees.

“I think for the most part, private business was banking on it (the Affordable Care Act) getting knocked down,” Augie Sodora, president of Teterboro, N.J.-based Swift Electric Supply, laughs. But it wasn’t “knocked down.” Instead, on June 28, the Supreme Court voted to uphold nearly all of the new health care law.

For some in the industry, the impact of the health care decision is about competition. “With the ability to opt in or opt out and take a penalty…that puts us in a position where we have to make a choice,” explains Bill Jarvis, vice president of sales at Cambridge, Ohio-based J & M Electrical Supply. “We’re in a competitive business, so if our competitor opts out and just takes the penalty—which is a much lower cost—and we decide to stay in, we are no longer able to be competitive. That really hurts us. So we are then going to be forced to opt out and take the penalty. There’s no choice in the matter for us.”

For others, it’s more about principles than policy. “I don’t need the government to tell me that I should provide health care benefits to my employees,” says Denise Keating, president of DATAgility. “I want to provide health care benefits to be able to attract the best talent to come to our company.”

Keating’s company is a small operation of only 15 people, meaning the employer mandate that would require companies with more than 50 employees to provide government approved health insurance coverage or face a fine, does not apply to her Chicago-based operation. “As a small business owner, we don’t have the negotiating power to obtain competitive pricing for insurance,” Keating says. “But with all of NAED’s 4,000 branches and 140,000 employees, we could have some real bargaining power. If we have to fulfill this mandate, then there have to be other policies that allow us to use those numbers.”

David Rosenstein, president of Buffalo Grove, Ill.-based ConneXion, agrees. “With our industry, because it’s so fragmented, we need to be able to aggregate and go into some kind of cooperative to buy our insurance with more cost effective pricing.”

That’s what NAED’s members are urging their members of Congress to do. “NAED supports patient-directed free market reforms to the U.S. health care system,” says Ed Orlet, vice president of government affairs at NAED. “Our system must put consumers in charge of the most important decisions they make – decisions about their health. Further, association health plans (AHPs) would allow NAED members to pool purchasing power and negotiate insurance plans across state lines. Any free-market reform package must allow AHPs.”

Even with suggestions for how to make the Affordable Care Act work better for their businesses, several distributors spoke about their fear of the unknown. “How is it going to affect things for us going forward? We just don’t know,” Sodora explains. “That’s the scary part of it—the uncertainty. Uncertainty is the problem with so many of these issues we as business owners are facing right now and it’s all of that uncertainty that makes us sick.”

“Now that it’s in law there’s some uncertainty taken away,” Rosenstein says, “but as far as how it will be implemented and actually work…there is still a level of uncertainty that we’re uncomfortable about.”

Uneasiness over the Affordable Care Act could linger for some time. With some of the provisions of the law not taking effect until 2014 and legislators on both sides of the aisle arguing over the real costs businesses and consumers will face, the exact impact distributors may face will remain unclear for now.

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