As their budgets are hammered by rising health care costs and the rolls of government-sponsored programs swell, states want more employers to provide medical insurance to workers. But the fiscal motivation is only slowly yielding political results.
Lawmakers in 11 state legislatures this year proposed bills that would mandate employer-paid health care. In 21 states, measures have been proposed that would require companies to report the number of their employees who receive government-funded health care.
In one of the most high-profile actions, the Maryland Legislature passed a bill in the spring that would require employers with more than 10,000 workers to spend at least 8 percent of payroll on health benefits. Republican Gov. Robert Ehrlich vetoed the measure.
Most of the bills haven’t made it to a governor’s desk. In Arizona, Democratic state Sen. Richard Miranda introduced legislation that would require the Arizona Health Care Cost Containment System to produce an annual report that lists employers whose workers have applied for state-sponsored medical care. The bill received a hearing in the Government Reform and Accounting Committee, but the chairman did not bring it to a vote.
"Next year, I’m hoping we’ll go a little further and get it to the floor," Miranda says. "Four years ago it wouldn’t have been heard at all."
In New York, a bill written by Democratic Assemblyman Pete Grannis that would require employers with 26 or more workers to pay into a statewide insurance pool if they don’t provide health coverage isn’t at the top of the statehouse agenda. Peter Newell, a Grannis aide, says the bill does not rank among the "front-burner issues."
In the state of Washington, a mandate bill was passed out of the House Health Care Committee but died in the Appropriations Committee, according to Dave Knutson, senior research analyst on the health care panel.
Even though the vast majority of mandate and reporting bills in legislatures are sponsored by Democrats--and likely to be opposed by Republicans--political dynamics can vary from statehouse to statehouse. But what cuts across all states is the opposition to mandates by employers.
"Whether or not these laws get passed and implemented is really all about the acceptance of these laws in the business community," says Laura Tobler, director of the health program at the National Council of State Legislatures. "What we learned in California is that the business community is not supportive of employer mandates."
In 2003, California passed a law, signed by then-Gov. Gray Davis, that would require companies with more than 50 employees to buy health insurance for workers and their families by 2007. The measure was narrowly defeated in a statewide referendum in November 2004. Wal-Mart and McDonald’s were two of the three top-spending opposition groups.
Wal-Mart’s name has become synonymous with health care mandate bills. In surveys of health care public assistance rosters, Wal-Mart also is often the company that has the most employees--or children of employees--signed up.
But Nate Hurst, director of government relations for Wal-Mart, cautions against drawing conclusions from raw numbers. Wal-Mart often sits at the top of state lists for tax revenues and charitable donations. "We’re the largest employer in a lot of states, and we’re going to be the largest on a lot of lists," he says.
Nonetheless, the huge retailer provides an inviting political target for venting frustration. "We’ve seen a disturbing trend of fewer and fewer workers getting health care coverage on the job. And those who do get coverage are being asked to pay more in premiums and get less for their money," says Sonya Schwartz, senior health policy analyst for consumer advocacy group Families USA. "This has become a trend among very large employers with more than 500 workers. A lot of these companies are Fortune 500 companies. Their CEOs make billions. It’s unfortunate that they’re lowering the standards for everyone. There’s no excuse for it."
"It’s real hard to imagine that a Republican-controlled Congress is going to take the lead on more employer mandates related to health insurance in the workplace."
Schwartz argues that uncovered employees aren’t signing up for Medicaid because most of them exceed the income ceiling and aren’t eligible. They go without coverage, but their children are more likely to qualify for government-sponsored programs.
The Bureau of Labor Statistics reports that 69 percent of private sector workers had access to medical insurance and 53 percent were covered through their employers. The numbers are based on a March 2004 National Compensation Survey, which also found that 75 percent of private employers offered health insurance.
Hurst says Wal-Mart provides insurance for 568,000 employees and covers a total of 950,000 people, when dependents are figured in. In a December survey of 1 million workers on the Wal-Mart payroll, 86 percent had health insurance coverage and 14 percent were uninsured. Wal-Mart’s total employment is 1.2 million. The waiting period before health care coverage kicks in is 180 days for full-time hourly workers and two years for part-time workers. The average premium is less than $40 per month for an individual and about $155 for a family.
Hurst denies that Wal-Mart steers some of its workers to government insurance programs. "We don’t design our plans nor do we ever encourage employees to apply for public assistance," he says. "We’ve taken 160,000 Americans off uninsured lists because of Wal-Mart insurance."
Careful picking targets
Politicians who intend to fire at Wal-Mart might shoot themselves in the foot. The holes in insurance coverage often are related more to how much an employee works than to where he or she works.
In doing research for the Washington Legislature, Knutson found that Wal-Mart had 341 workers on the state’s Basic Health Plan, ranking it first among large employers. But Catholic Community Services came in second with 265; the University of Washington was sixth with 139; and the state of Washington was seventh with 119. On the Medicaid rolls, Wal-Mart was first, Safeway was second and McDonald’s third.
Smaller companies are as much a culprit as large ones. "It’s really small to midsize employers who don’t provide insurance," Tobler says.
People who work for a company that does offer insurance may not take it because the premiums are too high. They opt for more affordable government coverage for their families through Medicaid or the State Child Health Insurance Program.
"They’ve become financially attractive in comparison to the private market," says Kate Sullivan Hare, executive director for health care policy at the U.S. Chamber of Commerce. She criticizes government programs for lacking incentives to limit the use of care. "That’s what happens when you create an entitlement program."
Forcing employers to pay for insurance might take money out of workers’ pockets. Employer health care expenses rose 8 percent last year and have grown from 5.5 percent of average wages to 11.6 percent since 1984.
"The problem is that if you mandate health care coverage, employers would most likely lower their wage growth," says Janemarie Mulvey, president and chief economist of the Employment Policy Foundation.
Before state health care mandates can go into effect, they may run into a federal roadblock. The 1974 Employee Retirement Income Security Act prohibits states from regulating employer benefits. An ERISA challenge hasn’t occurred in court. But proponents of the California health insurance mandate argue that it would have not have violated ERISA.
"The big question is, are these bills written in such a way that they will pass the ERISA test?" Tobler says.
One way to avoid ERISA problems is for Capitol Hill to pass employer-paid health care mandates, but that’s an unlikely route. "It’s real hard to imagine that a Republican-controlled Congress is going to take the lead on more employer mandates related to health insurance in the workplace," says Paul Fronstin, director of the health research and education program at the Employee Benefits Research Institute.
But a federal bill focusing on moral suasion has been introduced by Sen. Edward Kennedy, D-Massachusetts, ranking member of the Senate Health, Education, Pensions and Labor Committee. His legislation would require that states identify employers with more than 50 workers who receive government-funded health benefits.
"Companies don’t want to be on that list," says Laura Capps, Kennedy’s communications director. She cited Wal-Mart as a top offender in most states.
Kennedy intends to offer more legislation that targets uninsured workers. "This is the first step in … a series of measures that go after abusive practices by employers whose profits are surging but whose employees don’t have basic benefits," Capps says.
Whether it comes from Washington, D.C., or from state capitals, the message is the same.
"You don’t reap a profit based on taxpayers funding your employees’ health care," Miranda says.
Wal-Mart asserts that it is working with Congress and state governments. "We think it’s long past time for reform of the health care system," Hurst says. "We need to find a way to put an end to these rising costs. The issue is much broader than Wal-Mart. Targeting one company is unfair."
Workforce Management, August 2005, pp. 68-70 --Subscribe Now!