Health Care Ruling Creates Uncertainty for Shoe Industry

While the U.S. Supreme Court may have settled the legal issues surrounding the Affordable Care Act, footwear industry watchers said uncertainty about the impact of the law continues.
In a 5-to-4 ruling, the court on Thursday ruled the law constitutional on the basis that Congress has the power to impose taxes, thereby preserving the controversial “individual mandate” aspect to the law, which will require most Americans to buy health insurance or pay a tax. Companies with more than 50 employees also will be required to offer health insurance or pay a penalty.

Under the law, businesses with 50 or more full-time employees that do not provide health insurance would be required to pay a $2,000 fee per employee.
“It will take a while to figure out what it all means and how much it will cost companies,” said Kevin Burke, president and CEO of the American Apparel & Footwear Association. “It’s going to take several days or a week to see what the impact is going to be. I can’t say for sure how all our members feel, but what concerns me is any issue that will increase the costs [of doing business for] our members.”
Matt Priest, president of the Footwear Distributors & Retailers of America, said that while the legality of the law has now been established, the political ramifications are far from certain. What’s unknown is how aggressive attempts by the Republicans will be to overturn the law, as well as how footwear companies will respond if the law remains in place.
Priest said that many companies — both inside and outside the footwear industry — will have to determine if it’s more cost effective for them to offer health care coverage or pay the penalty.
“A lot of companies are going to have to look at the cost-benefit analysis,” Priest said.
He added that the court’s decision is likely to reignite the debate over the law. “I really think, politically, this is going to heat up the conversation again,” Priest said. “Just because it’s deemed constitutional, I don’t think that will necessarily shift how much people like it.”
And that all will contribute to ambiguity about the future business climate post-2014, when the law will go into effect, said Priest.
“At the end of the day, [the business community] wants certainty,” he said. “When you take that away, that creates challenges in planning for everyone. And that’s never good. Those uncertainties will continue to impact footwear companies, particularly smaller companies and retailers.”

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