Health care reform triggers concerns

Industry wonders if new law will raise costs

Jay McIntosh -- Furniture Today, March 30, 2010

HIGH POINT — It has loads of promise but also potential pitfalls. And it could cost quite a bit.

Those are among the first impressions furniture industry members had last week on the massive new U.S. health care reform plan. Many were trying to get a handle on how it will affect business costs.

So far, there were more questions than answers, especially about the reform provisions that won't take effect for a few years. And there was a healthy amount of skepticism about whether costs will be contained as well as the reform law's proponents have said.

"Like lots of people, I want to see the bill in its final form, but based on the current reality, I believe it will add costs to all of our businesses," said Jim Ziozis, president of home furnishings sources Linon and Powell. "Clearly, we are in a rising tax environment on the federal, state and local levels already."

Michael Ricks, president of accent furniture source Furniture Classics, said the plan looks like a good idea for uninsured or underinsured people. His company provides health insurance for some workers, but a number aren't covered, including most of its warehouse employees. He believes the plan could help such workers, and in turn could benefit the company.

"I do hope it will lead to less downtime for people who do come down with an illness and encourage them to go see a doctor," he said. "If it affects your job security, then maybe you will think twice about not going to the doctor."

Jon Richey, operations manager at case goods importer Modus Furniture International, said Modus provides health insurance to employees, and that health care costs represent about 5% of the company's general and administrative expenses. He said the reform plan "could drive costs up some. But I don't think it will break the bank for us in any way."

Niraj Shah, CEO and Founder of online retailer CSN Stores, said he favors the health care reform measure. CSN already provides all full-time employees with "very good health insurance," he said, and he expects the reform bill will have little effect on those costs.

"I do believe that finding a way to provide health care coverage to more Americans in a fiscally responsible way makes a lot of sense and is very important," Shah said. "While this solution has some issues, I do think it is a step in the right direction."

At Atlanta-based retailer Havertys, Chief People Officer Allan DeNiro spent hours on conference calls and Webcasts last week organized by health care brokers that serve the retailer and other companies, going through the law's provisions.

Some of the changes will take effect immediately. Others will come within six months and still others don't kick in until 2014. Among the items garnering the most interest and questions is a provision that extends dependent coverage to age 26, if the dependent doesn't have coverage from an employer, and another that eliminates the lifetime cap on medical cost coverage.

DeNiro said Havertys already has locked in its coverage with insurance providers for 2010 and will begin negotiations for 2011 in a few months.

"What we may see is some provisions of the new bill that go into effect in October and November, but the financial impact may not be seen until we've negotiated with carriers for 2011," he said.

Bruce Bradburn, CEO of Bradburn Gallery, a supplier of lamps, decorative accessories and accent furniture, said his chief question about health care reform is how it will affect the economy.

"I do have very, very serious concerns about how it's going to affect the (federal budget) deficit, because the deficit affects our economy, and that will affect our business," said Bradburn. He noted that supporters of reform say it will cut the deficit, add jobs and help the economy, but opponents say just the opposite.

Two industry sales representatives said they were concerned about the reform bill's cost and skeptical of its benefits.

"The way they made the bill causes a lot of concerns," said Mike Root, with Furniture Sales of Mid-America in Omaha, Neb. "The Democrats didn't have a lot of input - not that the Republicans offered much."

Root said that while he believes there is a need for health care reform, "I am concerned that we just added a very large bureaucracy to the government.... This is probably going to be costing us as taxpayers a whole bunch more money than we will be getting in benefits."

Ed Myers, a Broyhill rep in Pennsylvania and chairman of the International Home Furnishings Representatives Assn., said he and his fellow reps are likely to come out on the losing end of health care reform because they'll pay more taxes and "will not qualify for any of the free insurance" or other benefits.

Editor-in-chief Ray Allegrezza, Associate Editor Thomas Russell and Staff Writer Heath E. Combs contributed to this story.