As the national debate over health care continues, it’s anybody’s guess as to how things are going to turn out. Since the “tea party” events of last summer to the electoral shocker for the Senate seat previously held by Sen. Edward Kennedy (D-Mass.) just a few weeks ago, passage of health care reform legislation is anything but certain. That being said, NUCA and several other construction organizations have refocused our efforts to strike harmful language included in the Senate health care bill that would unfairly burden small construction firms by requiring them to provide and contribute to health insurance coverage while exempting small businesses in all other industry sectors. Including an employer mandate requiring companies to offer and contribute to health insurance for their employees has been a volatile issue since the debate over health care reform began.

Recognizing the negative impact that a mandate to provide health insurance would have on employers, the Senate’s version of the bill originally contained an exemption for small businesses with 50 or fewer employees. However, an amendment added at the eleventh hour of debate by Sen. Jeff Merkely (D-Ore.) specifically singled out the construction industry by altering the exemption so that it applies only to those firms with five or fewer employees and a payroll of $250,000.

If enacted in a final bill, construction employers could be forced to cover up to 60 percent of an employee’s premium or face penalties of $750 per full-time employee if the coverage does not meet these requirements. Reducing the small business exemption to five or fewer employees is an extraordinary difference from the 50-employee threshold that small businesses in every other industry sector would enjoy, and we’re not standing for it.

Merkely’s amendment was offered less than 72 hours before the final vote on the legislation, and NUCA immediately cried foul, and we certainly weren’t alone. Several construction and small business organizations collectively labeled this narrowly focused provision out as an unprecedented assault on the construction industry, and the ad-hoc coalition made the most of these critical hours. Working furiously over the three days before the Senate vote, dozens of visits to Senate offices were made, letters were sent and scores of phone calls were made.

In the end, the bill passed on a party-line vote and included the Merkely language, but our coalition had made great progress in raising awareness in the Senate about this harmful and unfair language. Many senators did not even know about the language, and several were visibly (and verbally) upset when they found out that it was included in the last hours before a final vote on the bill. To say the least, we raised a big stink and generated significant dialogue on Capitol Hill and in the media.

Calling Out the “Construction Carve Out”

Industry proponents of the small construction business carve-out of the employer mandate exemption are generally labor unions and national organizations representing union contractors, who do not face the same challenges as small businesses do to provide health insurance to their employees at an affordable cost. These groups used the faulty logic that a mandate to provide health insurance will somehow level the playing field between open shop and union contractors.

The reality is that open shop contractors, who employ 84 percent of the construction workforce according to the U.S. Bureau of Labor Statistics (BLS), are unable to enter into the type of multi-employer health plans that are available to union contractors. Such plans exempt union contractors from the cumbersome web of state mandates that directly contribute to the skyrocketing costs of health insurance.

NUCA has worked for years for passage of Association Health Plan (AHP) and Small Business Health Plan (SBHP) legislation that would allow for small businesses to pool their resources by banding together, spreading risk and driving down insurance premiums through increased competition in the small business insurance market. These insurance reforms and pooling arrangements would allow small employers the same flexibility and choice that is currently enjoyed only by labor unions and large corporations. Despite the fact that this would truly level the playing field, many of the same groups pushing for the construction carve-out opposed past AHP and SBHP legislation over the years.

The fact is that the Merkely language is a job killer, plain and simple. To assume that small construction businesses will be able to bear the increased cost of new federally mandated health benefits simply because Congress requires them to is shortsighted at best. Implementation of these rules would serve only to shut the doors of many small construction firms and eliminate job positions in companies that will inevitably downsize to qualify for the reduced exemption.

On top of that, the lack of a clear definition of the term “construction employer” in the bill could be interpreted to mean that this provision will impact any small supplier, distributor or manufacturer whose business is engaged with the construction industry. Once this point was made, our industry coalition grew significantly to include industry organizations representing equipment manufacturers, suppliers and distributors. The U.S. Chamber of Commerce, National Federation of Independent Business and Small Business and Entrepreneurship Council also joined the cause.

Progress Made, but Fight Rages On

In a January letter to the White House, 28 organizations claimed that “at a time when the unemployment rate in the construction industry exceeds 22 percent and there are more than 2 million construction workers out of work, it is unconscionable that Congress would target small businesses in the construction industry for the increased burden caused by both the House and Senate-passed mandates to provide and contribute to health insurance coverage.”

Additionally, following the lobbying blitz that ensued after passage of the health care bill, a letter from 18 senators was sent to Senate Majority Leader Harry Reid (D-Nev.) encouraging removal of the construction carve-out language. The sharply worded letter pointed out that “as the smallest employers in the housing and construction industry have arguably been hit the hardest during this economic downturn, it is most egregious and unfair that this legislation singles out one industry and subjects that industry to far greater fines and regulations than it does to any other labor sector of our economy.”

Construction employers generally offer the best health insurance coverage that they can afford, reflecting the reality of their business models, and they do so with pride. To single out an industry that has been hardest hit by the nation’s economic challenges, yet offer considerable job creation and economic benefits, would be an example of government at its worst. NUCA is proud of the job we’re doing in Washington and around the country through our active and effective grassroots advocacy by our chapters and members to strike the construction carve out from a final health care bill if and when one develops. Keep up the good work — as always, we can’t do it without you.

Eben Wyman is NUCA Vice President of Government Relations.