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Health reform stirs competition concerns

Annamaria Evans carryies a banner Monday outside Beaumont Hospital in Royal Oak, Mich. Activists are hoping to launch a petition drive to put a measure on the Michigan ballot asking voters whether they want to exempt the state from the federal health care overhaul. (AP Photo/Carlos Osorio)

Annamaria Evans carries a banner Monday outside Beaumont Hospital in Royal Oak, Mich. Both the AGC and ABC have come out against the federal health care overhaul. (AP Photo/Carlos Osorio)

By Sean Ryan

Two of the nation’s largest construction associations oppose a health care reform bill because, they argue, it threatens competition and would boost the cost of doing business.

“All around, it’s an awful deal,” said Geoff Burr, vice president of federal affairs for the Associated Builders and Contractors Inc.

ABC and the Associated General Contractors of America argue the bill would raise contractors’ insurance costs across the board. It also could put builders at a bidding disadvantage if they do not offer insurance or if they provide coverage that does not satisfy the bill’s criteria, Burr said.

The health care bill, which the U.S. House of Representatives approved on a 219-212 vote and which was expected to be signed by President Barack Obama on Tuesday, does not require companies provide insurance. But companies would face fees if they offer less than that required by the bill.

Those fees could help union contractors, which are required to provide health insurance through their collective-bargaining agreements, said John Schmitt, business manager for Laborers Local 113 in Milwaukee. The $2,000 per employee per year fee for failure to offer health insurance could increase overhead costs for nonunion companies and help union firms compete, he said.

“Looking at our end,” he said, “we always have our contractors that talk about how they’re always having trouble being competitive because of the fringe benefits end.”

How the change will affect competition between union and nonunion contractors is difficult to predict, said Jeff Shoaf, senior executive director of government affairs for the Associated General Contractors of America. He said more than 90 percent of the AGC’s members provide health care, but they all likely face cost increases.

“We don’t think it looks for the best way to really control the cost of health care,” Shoaf said.

Even if they are required to provide insurance, nonunion contractors would have the opportunities to find a good deal through regional exchanges in which insurers would compete in an open market to provide coverage for companies, Shoaf said. Union contractors, he said, would not have that opportunity.

“Open-shop contractors would still have the upper hand,” Shoaf said, “because they can use exchanges to get lower costs than union plans.”

But Burr said some parts of the health care bill specifically target smaller, nonunion builders and will hurt their competitiveness.

“Those people will be at a competitive disadvantage,” he said, “because another change that is made in the reconciliation package is it drags in part-time workers as well.”

Part-time and seasonal workers sometimes choose to work without insurance in order to get a higher wage, Burr said.

He said he does not know how many of ABC’s companies would be hit with new fees from the bill. But he, like Shoaf, predicted higher costs across the board.

“At this point, we’re still analyzing it,” Burr said. “But I certainly think there’s the potential for it to have the impact of making our members less competitive.”

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