REPORT FROM THE U.S.—Hoteliers across the United States are planning their next steps following a U.S. Supreme Court ruling Thursday that largely upheld health-care reform.
The Court, by a 5-4 margin, on Thursday upheld President Obama’s health-care mandate as a tax. HotelNewsNow.com reached out to several hotel industry officials after the ruling came down for their reactions to the Court’s decision.
Marlene Colucci, executive VP of public policy for the American Hotel & Lodging Association, said the group’s next steps now fall mainly along two tracks:
- Continue to work on implementation of the reform, and react to other regulations that might come about; and
- monitor the debate surrounding the measure to see if there are other proposals or alternatives that will benefit members of the AH&LA.
“The way the Court fashioned its opinion makes me believe that while we’re going to have to, for our members, move forward … it’s very clear this fight is not over,” she said.
As for hotel executives, many of whom have criticized President Obama’s health-care plans from day one, they will have to deal with the new realities that are in place, said Bharat Patel, co-founder, chairman and CEO of Sun Development & Management Corporation.
“I think we’re going to have to learn to live with the law now like a lot of other things we have to learn to live with,” Patel said.
Colucci echoed a similar sentiment. “At this point, we’ve got to deal with what we’ve got."
Patel’s company, which owns 35 hotels in 14 states, employs a workforce of 1,000. Sun has a self-insurance policy in place, so Patel does not believe the reform will have much of an effect on his company.
Through self insurance, a company assumes the risk itself and pays claims out of a fund. Employees contribute 50% of the investment until the money is needed to pay claims.
Meantime, Robert Habeeb, president and COO of First Hospitality Group, said the reform is likely to impact his company. First Hospitality, which employs 3,500 and has a portfolio of 47 hotels in the United States, had an analyst come in recently to assess the reform’s impact on the company.
First Hospitality Group
“The best advice that this consultant could give us was to double the number of part-time workers and cut the number of full-time workers in half; to cancel the plans and pay the fines,” he said. “That, economically, was the cheapest plan we could come up with. By having to insure everyone, we would effectively triple our costs, which for us would be a $6-million hit.”
Instead, Habeeb said it is cheaper for the company to pay the approximately $2.5 million in fines and put employees in the free market than pay for their health care.
“It’s a noble cause, but as an industry, we’re going to be one of the hardest hit,” Habeeb said.
The ruling comes at a time when the hotel industry is in the midst of a gradual recovery following the downturns of 2008 and 2009. Patel said the Court’s decision could hold at least one positive for the industry.
“Hopefully, they take advantage to raise rates to compensate” for any increased costs brought about by the health-care mandate, he said.