Maryland Mandates Wal-Mart Health Care Contribution

Update 4 - 5.30 pm Pacific
Today the Maryland State Senate (30-17) and House of Delegates (88-50, at just after 7 pm Eastern) voted to override Republican Governor Robert Ehrlich's veto of the"Wal-Mart bill" [SB 790, HB 1284] which "requir[es] companies with more than 10,000 employees in the state to pay a set amount of money for health-care benefits." A veto override requires a three-fifths vote, and 85 House of Delegates votes were needed.

The primary argument against the bill is that it will hurt jobs. The Wall Street Journal reports that only four companies would be affected by the bill: Giant Food LLC, Johns Hopkins University, Northrop Grumman Corp. and Wal-Mart. However, according to Bloomberg, Wal-Mart is the only company currently not meeting the minimum threshold:

The legislation, called the Fair Share Health Care Fund Act, requires large companies to devote at least 8 percent of their payroll to health care and would become the first U.S. state law of its kind. Wal-Mart employs almost 17,000 people in Maryland and is the only company there known not to meet the bill's requirements.

The larger issue facing Maryland and other states is the cost of health care -- and the pressure on taxpayers to subsidize the cost of health care for its citizens not covered by an employer-paid-plan. The Wall Street Journal reports that six other states are considering similiar legislationm including Massachusetts and Illinois. If companies do not meet the minimum allocation, they must make up the difference in taxes.

In floor arguments, one assemblyman related the story of a constituent who works for Wal-Mart, making about $400 a month. The insurance plan offered this worker cost $200 a month. Another noted that Maryland citizens are subsidizing the largest retailer on the planet through public health care support; he noted that competitors like Giant and Safeway will have no choice but to reduce their health care plans. Yet another said the bill was designed to simply beat business over the head.

According to UFCW, "More than 60 percent of Wal-Mart employees -- 600,000 people -- are forced to get health insurance coverage from the government or through spouses’ plans—or live without any health insurance." Nationally, 67 percent of employees have insurance provided by their employer; for Wal-Mart, the percentage is only 47 percent. Other data:

• In Alabama, 3,864 children of Wal-Mart employees cost state taxpayers between $5.8 million and $8.2 million for on Medicaid coverage.
• In California, Wal-Mart workers rely on the state taxpayers for about $32 million annually in health-related services.
• In Tennessee, almost 10,000 Wal-Mart employees are on the state’s expanded Medicaid program.
• In Georgia, more than 10,261 children of Wal-Mart employees are enrolled in the state’s PeachCare program for health insurance for families meeting federal poverty criteria.

The Wall Street Journal asked law professor Paul Secunda for this analysis. He believes federal law could preempt the state action if Wal-Mart self-insures because "the deemer clause should lead to ERISA preemption of the state law; if not (that is, it insures its health plans through another company), it should be saved from ERISA preemption as a law that regulates insurance under ERISA's Savings Clause."

ERISA stands for the Employee Retirement Income Security Act of 1974 and it "sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans," according to the Department of Labor.

Wal-Mart responds:

More than three-fourths of Wal-Mart associates have health insurance. And every Wal-Mart associate in Maryland -- both full-time and part-time -- can become eligible for health coverage that costs as little as $23 per month.

This vote was never about health care. This was about partisan politics in the Maryland gubernatorial race. In allowing a bad bill to become a bad law, the General Assembly took a giant step backward and placed the special interests of Washington, D.C. union leaders ahead of the well-being of the people they serve. And that's wrong.

The AFL-CIO intends to seek sponsors for legislation similar to Maryland's Fare Share Health Care bill in more than 30 states during this legislative session.

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