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Maryland 'Wal-Mart Measure' Reignites Debate on Mandates

January 24, 2006
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When the Maryland Legislature overrode Republican Gov. Robert Ehrlich’s veto and approved a so-called "Wal-Mart bill" in early January that would force employers with more than 10,000 workers to devote at least 8 percent of payroll to health care benefits, the state ignited a national dialogue about uninsured Americans.

Maryland’s action gave rhetorical momentum to similar bills in other states, most of which have seen health care spending skyrocket. Local politics will determine whether those measures pass.

In New Hampshire, a bill has been introduced in the state House that would require businesses with 1,500 or more employees to spend 10.5 percent of payroll on health insurance or pay into a Medicaid fund.

Unlike in Maryland, which has a majority Democratic legislature, Republicans dominate in New Hampshire. "I’m not super optimistic (the bill) is going to go anywhere," says Democratic Sen. Martha Fuller Clark.

Still, Maryland gave the New Hampshire measure--and the underlying issue--legitimacy. "It’s going to provoke a very intense conversation about who should be paying for health care--business, government or individuals," Clark says.

Even in a Democratic state, the odds can be long for a Wal-Mart bill. "These types of measures get a lot of debate; they’re not easily passed," says Laura Tobler, health policy analyst at the National Conference of State Legislatures. On January 19, a bill in the Wisconsin Legislature that would require large companies to pay 80 percent of employee health care costs died in committee.

When they are approved, momentum sometimes fizzles. Oregon, Massachusetts and Minnesota never implemented employer mandates. One measure that was passed in California in 2002 was killed in a 2004 referendum.

In Washington state, a bill that would require businesses with 5,000 or more employees to spend 8 percent of payroll on health insurance has been sent to the House Commerce and Labor Committee instead of the Health Care Committee.

The move could give labor groups more influence in getting it through the Democrat-controlled Legislature. "This really focuses it as a labor standards requirement for employers," says Dave Knutson, a legislative analyst in the Washington House.

AFL-CIO president John Sweeney is touting the Maryland vote as an example of how labor is effectively taking its health care advocacy campaign beyond Washington.

Wal-Mart spokesman Nate Hurst called the Maryland bill "irresponsible" and politically motivated. He asserts that it fails to increase health care coverage or affordability and discourages companies from lowering health care costs because doing so might push their health spending below the mandated percentage. Wal-Mart has not decided whether to challenge the Maryland bill in court as a violation of federal laws regulating employee benefits.

More than 75 percent of Wal-Mart’s 1.3 million U.S. employees have health insurance--and coverage is available for as little as $11 per month to full-time and part-time workers, according to the company. Hurst says Wal-Mart is trying to expand coverage through health savings accounts.

Although it is primarily small businesses that don’t provide health care coverage for employees, health care mandates could discourage large companies from locating in a state. "Can the business afford those jobs? That will always be a consideration," says Helen Darling, president of the National Business Group on Health.

As Wal-Mart battles health care mandate bills in state legislatures around the country, it may find itself as the lone large employer at the barricades. In some states, the bills are written so that Wal-Mart is the only company affected.

For instance, a measure will call for companies with 10,000 or more employees to devote 8 percent of payroll to health care spending or pay the difference into a state fund. In some states, large employers other than Wal-Mart already pay 10 percent or 12 percent of payroll for health care. That means that in Washington state, big companies like Microsoft, Weyerhaeuser and Boeing might not jump into the fray over a mandate bill.

Those three companies and state business groups have been largely silent, says Knutson, the legislative analyst in the Washington House. Big companies that are paying beyond the mandated percentage "see an uneven playing field that this (bill) might help to level out," he says. "It might be Wal-Mart against everybody else. The proposals have pretty much targeted one employer."

Wal-Mart is working with business coalitions to turn back mandate bills and is receiving help from another segment of the business community, says Hurst, the chain’s senior manager of public affairs.

In some states, mandate legislation applies to companies with as few as 1,500 employees.

"We have had a lot of small businesses reach out to us," to join the fight against mandates, Hurst says. In some states, though, it’s not clear who is paying how much on health care. That’s why mandate bills are often accompanied by those imposing reporting requirements on companies.

"One of the weaknesses is that we don’t have the data to demonstrate to what degree … companies have their employees on Medicaid," says Clark, the Democratic New Hampshire state senator.

Mark Schoeff Jr.

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