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Health Care Reform

Health Care Reform

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The Issue

After a series of false starts this spring, President Trump and Republican congressional leadership were poised to fulfill their top campaign promise when the House voted in early May to repeal the controversial Affordable Care Act. But the effort hit additional challenges in the Senate, and even the “skinny” version of repeal that ACA opponents had hoped would finally strike a balance between the conflicting demands of conservative and moderate Republicans was voted down in late July. Backers of repeal have not given up, but Senate hearings held in September focused on stabilizing the individual market for people who buy health insurance on their own rather repeal. Other efforts short of repeal are expected to address issues such as reporting requirements, setting a 40-hour workweek for ACA eligibility and repealing or delaying ACA components such as the Health Insurance Tax or the Cadillac Tax.

In both the House and Senate, the difficulties came largely because of differences in the degree of ACA repeal sought by members of the Republican caucus. Moderates wanted to see more incremental improvements in the ACA, particularly in regard to the individual insurance market. Conservatives sought a more complete repeal substantially reshaping the health care system. Both sides supported repeal of the ACA’s revenue provisions.

The interparty tensions were exacerbated by the legislative procedure used to try to get repeal to Trump’s desk for his signature. In both chambers, backers used a special process known as “budget reconciliation,” which would have allowed the measure to pass the Senate with only 51 votes rather than the 60 required to overcome a filibuster. (Republicans hold only 52 seats in the Senate, and Democrats strongly opposed ACA repeal.) But reconciliation is limited to issues that have a direct revenue impact – the law’s employer mandate that most business provide health coverage for full-time workers, for example, could not have been repealed outright but the penalties for non-compliance could have been reduced to zero. That meant many pieces of Obamacare would have remained in place for a significant period even if the legislation had become law, leaving considerable uncertainty and instability in health benefits until the “repeal and replace” process could be completed.

Members of the conservative House Freedom Caucus were not satisfied with that approach and refused to yield despite a frenzy of vote whipping by Republican leaders and being called to the White House for a meeting with Trump. The legislation was scheduled for a vote twice – on March 23 and 24 – before being withdrawn rather than voted down. Extensive negotiations and adjustments to the legislation finally led to 217-213 approval on May 4.

Throughout the House debate, NRF urged passage of the bill, calling it “realistic legislation” that would achieve “real reform” even if it did not achieve full repeal.

Similar disagreements between conservative and moderate Republicans in the Senate required a tie-breaking vote by Vice President Pence just to officially proceed to debate. After two versions of a repeal bill failed to win support, repeal backers offered a limited “skinny” bill that would have largely provided a framework for negotiations with the House on final legislation. But that measure was rejected 51-49 on July 28. The deciding vote was cast by Senator John McCain, R-Ariz., who dramatically signaled his position with a “thumbs down” gesture rather than giving Republicans a 50-50 tie that Pence could have broken in the bill’s favor.

“It was very disappointing to come so close on even a limited bill but we will use our disappointment to fuel our push on incremental improvements that will lead to a better health care law,” NRF Vice President for Health Care Policy Neil Trautwein said in a statement issued after the vote. “While repeal remains the ultimate goal, there are many ways to reduce the burdens of this flawed law for the benefit of employers and workers alike. This fight is far from over.”

Going forward, NRF hopes to see Congress use its regular legislative procedures to achieve more robust solutions to retailers’ priorities than could have been achieved under budget reconciliation. Reforms NRF will pursue include full repeal of the employer mandate, restoration of the 40-hour workweek for benefit eligibility, repeal of ACA taxes including the Cadillac Tax and Health Insurance Tax, and changes to the byzantine ACA reporting rules.

Separately from ACA repeal, Trump signed an executive order in October that would allow small businesses to buy insurance for their workers through new federally sanctioned association health plans that would operate across state lines for the first time.

AHPs allow small employers to band together through trade or professional associations to purchase coverage at more affordable rates normally available only to large companies. They are already allowed at the state level in some states, but cannot currently operate across state lines. The order signed by Trump directed the Labor Department to draft new regulations that would allow employers “in the same line of business” to join together under AHPs regardless of where they are located.

The House approved an AHP bill in March that would also allow the plans to operate across state lines, and similar legislation has been introduced in the Senate. With the new Labor Department regulations still being drafted and subject to review before they can become final, Congress is expected to continue to move forward on the legislation in the meantime.

NRF has strongly supported AHPs, saying expansion of the plans would help small businesses compete with larger companies in providing employees with health insurance at affordable rates. Passage of the House bill came after Retailers Association of Massachusetts President Jon Hurst testified in favor of the national legislation on behalf of NRF. He told Congress the AHP run by his group under Massachusetts state law since 2012 has reduced costs for more than 5,000 workers at 287 small businesses.

Why It Matters to Retailers

While retailers have experienced the same added payroll costs as other industries, compliance is particularly complicated because of the nature of retail’s workforce. Retailers employ not just permanent, full-time workers, but also a large number of part-time, seasonal and temporary workers, and work hours can change rapidly according to demand. Certain provisions of the law, such as its 30-hour definition of full-time, are problematic under those conditions. As an industry with extremely tight profit margins, retailers are unable to absorb the added costs, and could be forced to lay off workers.

NRF Advocates for True Health Care Reform

The current action comes seven years after passage of the ACA in 2010. During that time, the law has posed a number of challenges for employers and NRF has worked with Congress to minimize the burdens imposed by the measure. NRF’s priorities have included measures to streamline and simplify reporting requirements, end the Cadillac Tax and other tax provisions, and define “full-time” as 40 hours a week rather than 30.

With insurance premiums skyrocketing for years, NRF has a long history of seeking health insurance reform that would lower the cost of medical care and coverage. Instead, the ACA has emphasized mandates that drive up expenses for employers. Since the beginning of 2015, the law’s employer mandate has required that businesses with 100 or more workers provide insurance to full-time employees at coverage levels determined by the government, and the requirement has applied to businesses with 50 or more employees since the beginning of 2016. The costs of the mandates are so high some retailers have been forced to stay under the 50-employee threshold to avoid being covered; others have cut workers’ hours so they don’t count as full-time.

While some elements supported by NRF can be seen in the ACA, NRF opposed passage because of the law’s failure to adequately address health care costs and its job-killing employer mandate. NRF has worked to repeal the most onerous provisions of the health care law, such as the employer mandate, but those efforts were largely futile before the results of the 2016 election.

While waiting for possible repeal, NRF has focused on efforts to ease implementation and help retailers with their ongoing compliance burden. A number of welcome reforms backed by NRF were seen in 2015, beginning with repeal of a requirement that would have pushed companies with between 50 and 100 workers into the small-group health insurance market, which carries higher premiums than the large-group market and additional mandates. Also repealed was a requirement for large employers to automatically enroll workers in health care plans whether they wanted coverage or not. The effective date of the 40 percent Cadillac Tax on high-value health plans was delayed two years to 2020, the 2.3 percent medical device tax was suspended for two years until 2018, and the law’s per-subscriber Health Insurance Tax on insurance companies was delayed from taking effect in 2016 to take effect this year instead.

NRF Health Reform Priorities

Health Care Income Tax Exclusion

NRF Position: Oppose proposals to cap the income tax exclusion for employer-provided health benefits.

Background: Health benefits provided by employers are not taxed like wages.  Instead, they are excluded from a worker’s total income. House Republicans have proposed capping the unlimited exclusion in an effort to reduce overall health care spending. NRF opposes capping the exclusion because it would undermine the source of coverage for 175 million Americans.

ACA Reporting Fix

NRF Position: NRF supports the Commonsense Reporting Act (H.R. 2712/S. 1996), bipartisan legislation to streamline and simplify reporting requirements under the Affordable Care Act.

Background: The ACA requires reporting of information about employer-provided coverage in order to administer the individual and employer mandates. The current system looks backward (much like a tax return) and requires the matching of coverage and Social Security numbers for individual employees and dependents. In addition, employees will face massive tax bills to refund health credits mistakenly obtained through ACA exchanges. The Commonsense Reporting Act shifts to a prospective system, simplifying reporting and helping prevent mistaken access to credits.

End the ‘Cadillac’ Tax

NRF Position: NRF supports bipartisan legislation to permanently repeal the ACA tax on high-value health benefit plans (H.R. 879, the Ax the Tax on Middle Class Americans’ Health Plans Act; H.R. 2050/S. 2045, the Middle Class Health Benefits Tax Repeal Act).

Background: The ACA sought to discourage excessively generous health plans by creating a surcharge on the excess value of health care, wellness and health savings account benefits over an indexed limit. The Cadillac Tax defines health benefits too broadly and indexes the value in such a way that mainstream plans will quickly be subject to the surcharge tax. The Cadillac Tax is currently in a two-year delay, but NRF supports its complete repeal.

Restore the 40-hour Workweek

NRF Position: NRF supports bipartisan legislation to repeal the ACA’s definition of “full time” for benefit eligibility at 30 hours per week (H.R. 30, the Save American Workers Act; S. 30, the Forty Hours is Full-Time Act).

Background: The ACA defines full-time work for health coverage eligibility at 30 hours per week, thus encouraging more use of part-time employees. Defining full-time as the standard 40-hour workweek would add to employee paychecks and encourage more full-time work. The House passed H.R. 30 in January 2015.

Small Business Health Reimbursement Account Relief

NRF Position: NRF supports the Small Business Health Care Relief Act, bipartisan legislation to repeal the ACA’s penalties for small employers who offer support for health coverage through health reimbursement accounts (H.R. 5447/S. 3060).

Background: The ACA does not require employers with fewer than 50 full-time employees to provide coverage. But it prohibits these employers from providing financial support for anything less than full coverage. Penalties are severe, amounting to $100 per employee per day. H.R. 5447 has passed the House and is expected to pass the Senate and be signed into law later this year.

Seasonal Employees Technical Fix

NRF Position: NRF supports the STARS Act (Simplifying Technical Aspects Regarding Seasonality), bipartisan legislation to clarify treatment of seasonal employees for purposes of the ACA employer mandate (H.R. 863/S. 1809).

Background: The ACA has two incompatible definitions affecting treatment of seasonal employees for the purpose of determining whether the employer is subject to the employer mandate. The STARS Act clarifies that a seasonal employee who works less than six months in a year and performs work commonly associated with certain seasons or periods of the year will not be counted toward the 50-employee threshold for the employer mandate.

Additional Resources

  • The infamous portal to the Federal Fallback Marketplace (exchange). Online marketplace for individuals and businesses with 50 or fewer employees.


Affordable Health Benefits Coalition – NRF-chaired coalition of allied business interests focused on the cost of medical care and health insurance coverage.

Employers for Flexibility in Health Care Coalition

Coalition letter to the IRS on ACA employer reporting mandates  

Washington Council Ernst & Young’s reference deck on ACA employer requirements

The Affordable Coverage Project – Coalition working to repeal the ACA health insurance tax

Diverse viewpoints

Alliance for Health Reform’s Employer Mandate of the Patient Protection Affordable Care Act Toolkit 

The Galen Institute 

The Brookings Institute