Builder groups including the National Association of Home Builders (NAHB) and the National Lumber and Building Material Dealers Association (NLBMDA) urged their members this week to protest a little-noticed amendment to the Senate's health care bill that requires construction industry employers with as few as five employees to provide health insurance to their workers starting in 2014.

The amendment, which NLBMDA said was added late last week to Senate Majority Leader Harry Reid's package of changes, revises a section of the bill that exempts employers with under small employers from having to provide coverage. The exemption previously applied to companies with as many as 50 employees.

That amendment now is part of the Senate health care bill, which earlier today got a filibuster-proof 60 "aye" votes in the second of three crucial procedural motions. The final vote on the now-revised package could come sometime Wednesday.

It's not immediately clear what impact the revision would have on building material dealers and other parts of the construction supply chain. The actual language in the manager's amendment (see page 76) says the five-employee rule will apply to any employer with "substantial annual gross receipts ... attributable to the construction industry" and with annual payroll expenses exceeding $250,000. The provision would take effect starting after Dec. 31, 2013.

While the measure apparently was intended to affect small home builders, theoretically it could apply as well to truss makers, panel plants, millwork shops, or even separately incorporated installed sales units at lumberyards. On the other hand, the amendment's impact on building material dealers could be limited, as a ProSales survey conducted last fall indicates that more than 90% of dealers--even those with less than $10 million in sales--provide health care insurance. But that same survey also turned up anecdotal evidence that some dealers had dropped their insurance coverage this year.

"This language is so vague and undefined it could include businesses all along the supply chain," NLBMDA wrote today in an e-mail to members. It said the amendment "treats small businesses in our industry, already devastated by the recession, differently than other small businesses. There is no justifiable rationale for singling out of the construction industry and adopting an amendment without discussion, open debate or even a vote."

Reid, a Nevada Democrat, inserted the measure at the behest of Sen. Jeff Merkley (D-Ore.), according to an NAHB spokesman. The NAHB said it believes the AFL-CIO is the original source of the language. Spokespeople for Merkley and the AFL-CIO's Building and Construction Trades Department did not return calls by ProSales for comment.

The NAHB issued a statement late Monday decrying the amendment, which it said "is certain to derail the fragile housing recovery and threaten the solvency of countless small home building firms."

"This narrow provision is an unprecedented assault on the construction industry and unjustly targets an industry trying to keep its doors open during the worst housing downturn since the Great Depression," NAHB chairman Joe Robson, a home builder from Tulsa, Okla., said in a statement. "If this provision were to be enacted into law, it would prove to be catastrophic for the home building industry. In short, this is a true jobs killer. Thousands of small builder firms struggling to stay afloat could go under. We strongly urge the Senate to reconsider and pull this onerous provision that threatens the viability of small home builders across the nation."

Craig Webb is editor of ProSales magazine.