Maryland law targeting Wal-Mart could be difficult to duplicate

When the Maryland legislature passed a law last week requiring that its largest employers, including Wal-Mart Stores, spend at least 8 percent of their payrolls on health care, supporters of the measure claimed they had delivered a clear message to corporate America: Companies cannot shirk their duty to employees, reported The New York Times.

"Let's light the torch. Let us lead the way," Senator Gloria G. Lawlah, a Democrat who sponsored the bill said, according to the Jan. 16 online edition of The Times.

Elated union leaders claim that they have lined up legislators in 30 states to introduce similar bills this year — and that the Maryland vote is likely to give their campaign added impetus.

“Whether this type of legislation becomes a trend is unpredictable,” said Diana O'Donoghue, government relations director of the Norwood, Mass.-based New England Convenience Store Association.

“Generally, our industry opposes employer mandates and one-size-fits-all solutions. We are a diverse industry of various size c-stores and petroleum operators. Health-care costs continue to accelerate for our members’ businesses,” O'Donoghue explained to NPN MarketPulse. “Many of them already provide health insurance as an employee benefit and recruitment tool, but would not support a state requirement upon their business to do so.”

For all the unions' success in Maryland, though, it is doubtful that the campaign will steamroll across the country, policy analysts told The Times. Because the other states' bills are written much more broadly, they are likely to draw more opposition from companies that watched the Maryland debate from the sidelines.

Still, the new Maryland law has already begun to raise the decibel level of the debate over how to handle the nation's growing number of people with no health insurance, which is now at 46 million. Union activists and others say the law focuses more attention on the role of employers in providing the insurance.

"There is now more public consciousness about how large employers do not provide health care," said Anthony Wright, the executive director of Health Access California, a consumer coalition that supported a similar law in California that was narrowly defeated by voters a little more than a year ago, reported The Times.

Only a handful of states, among them Rhode Island, Washington, Colorado and New Hampshire, are likely to seriously consider requiring employers to provide a certain level of coverage, according to health care advocates and union activists.

Maryland 's bill, drafted to apply to companies with 10,000 or more employees, actually affects only one company in the state: Wal-Mart Stores, which has come to symbolize corporations that do not provide adequate health benefits to their employees. The laws being contemplated elsewhere, aimed at companies with 1,000 or 2,000 employees in that particular state, could affect dozens of other corporations, like McDonald’s and the CVS Corporation, the drugstore chain.

"The broader the scope of the attack, the broader the counterattack that will be mounted," Prof. Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University told The New York Times. Van Horn does not expect the Maryland law to lead to the passage of similar bills in many other states.

Retailing and restaurant chains, which are most vulnerable to any state law mandating coverage because they employ so many low-income workers, are already preparing an aggressive campaign to prevent lawmakers from passing the legislation outside Maryland. Three trade groups — the National Retail Federation, the National Restaurant Association and the International Franchise Association — have created a coalition to oppose legislation.

"If retailers are hit with this extra cost, this is going to put them in a position to raise prices for consumers or lay off workers," said J. Craig Shearman, vice president of government relations at the retailers' federation.

The Maryland law is likely to face legal challenges to determine whether federal law allows states the authority to mandate health benefits, said J. D. Piro, the chairman of the health law group at Hewitt Associates, a consulting firm.

The Maryland Chamber of Commerce, a business lobbying group, argued that the Maryland bill was pre-empted by the federal Employee Retirement Income Security Act, or Erisa, even though the Maryland attorney general found that the bill did not violate federal law because it imposed no requirements on how companies spend their money, reported The Times. "It's likely this will go to court," Piro said.

Struggling to balance their own budgets in the face of rising health care costs, some state officials are likely to look favorably on action that would force companies to shoulder more of the bill. "I think they will be looking," said Helen Darling, the president of the National Business Group on Health, an employer coalition based in Washington. "It seems to be a cheap fix."

States are searching for ways to pay for programs like Medicaid, Piro agreed. "It's a question of who has the money," he said.

Amy G. Rice, a Democrat in the Rhode Island House of Representatives, said the bill that she planned to introduce next week had "a high chance of passing" in the Democratic-controlled state legislature, according to The Times.

"Legislators in both parties are very concerned about the health care crisis in Rhode Island," said Rice, who cited a poll that found that a majority of the state's residents supported the idea of requiring large corporations to increase spending on health care.

Her bill would require companies with more than 1,000 employees to devote 8 percent of their payroll to health insurance. Rice estimates that of 38 employers with more than 1,000 employees, only six do not meet the 8 percent requirement.

Proponents of similar bills in other states say most companies would not be affected. As a result, they say, companies that do provide coverage may be reluctant to support the efforts of those that do not.

"They won't be the leaders of the opposition," said Wright, the California advocate who said the majority of the resistance in his state came from fast-food and retailing companies. In fact, some companies may even support the measures. In Maryland, for example, Giant Food, a regional supermarket chain that competes with Wal-Mart, came out in favor of the legislation, The Times reported.

Because it is so narrowly written and may not result in coverage for significant numbers of uninsured people, policy analysts say the Maryland bill cannot be viewed as a model for any states looking seriously at gaps in health care coverage. "The Maryland law is aimed at Wal-Mart, not the issue of the uninsured," said Paul B. Ginsburg, the president of the Center for Studying Health System Change, a nonprofit research group in Washington.

Wal-Mart insures fewer than half of its 1.3 million employees in the United States. According to an internal memo, 5 percent, or roughly 65,000, of its workers rely on state Medicaid plans, compared with 4 percent for other national companies.

Even if other laws apply to significantly more employers, some policy analysts say these measures do not represent long-term solutions to the problem of paying for health care. "I'd rather see the state work with all employers to see if they can come up with incentives to spread the risk among a broader pool," said Laura D. Tyson, dean of the London Business School and former chief economic adviser to President Bill Clinton, according to The Times. "This is a Band-Aid, arbitrary, firm-specific solution to one of the most important policy problems of the United States."

The focus on the issue of low-income workers who cannot afford coverage even when it is offered is important, said Peter V. Lee, the chief executive of the Pacific Business Group on Health. But, he said, the question of who pays for the care for these individuals — the state or the employer — does not address the fundamental problem of rising health care costs in this country, he said.

"All we're doing is playing squeezing the balloon," he said.