Maryland law ripples across states

WASHINGTON – Maryland’s bold new law requiring Wal-Mart and other large companies to increase health care coverage of their workers has given new life to supporters trying to pass similar legislation nationwide.

The state’s Legislature on Thursday passed a law that directs firms with more than 10,000 employees to spend at least 8 percent of their payrolls on employee health benefits. The law targeted Wal-Mart, the world’s largest retailer, whose low pay and scant benefits have drawn widespread criticism.

In at least 30 other states, plans are under way to draft and introduce similar “fair share” laws. A proposal in Rhode Island would require companies with 1,000 or more employees to spend 8 percent of their payrolls on health benefits. A bill in Washington state would require companies of 5,000 or more to spend 9 percent of payroll on employee health care.

In each state proposal, affected companies that don’t meet the payment threshold would have to pay the difference into a state fund to assist the uninsured.

Maryland’s law, which overcame fierce opposition from Wal-Mart and a veto by Republican Gov. Bob Ehrlich, prompted cheers from activists across the nation.

“Just (from) the level of calls we’re getting from supporters today, everyone’s excited. I certainly think what happened in Maryland will help the momentum here in New Hampshire,” said John Thyng, director of New Hampshire for Health Care, a Concord-based organization that also backs a measure requiring an 8 percent spending threshold for firms with 1,000 or more workers.

To rein in state Medicaid costs for the uninsured, which now rival spending for education, supporters say it’s important that large companies provide adequate coverage for workers and their families.

The percentage of businesses that offer health insurance has declined for five straight years, according to a 2005 report by the Kaiser Family Foundation. The cost of health insurance premiums has gone up 73 percent, the Kaiser study found.

But groups such as the state and national chambers of commerce and the National Federation of Independent Business have strongly opposed “fair share” measures, saying they could scare new jobs away and cause the number of existing jobs to dwindle if cash-strapped employers can’t afford the mandated coverage.

Fair share laws also don’t address the problem of the uninsured and rising health care costs, said Helen Darling, president of the Washington Business Group on Health, which represents the health care interests of more than 200 large employers that provide health coverage for more than 51 million people.

“We’re very concerned about states taking steps like this, which really is a mandate on businesses,” Darling said. “They ought to be working on a way to deal with the uninsured, and this doesn’t make sense as a way to do it.”

Opposition to Maryland’s law was led mainly by Wal-Mart, which employs nearly 17,000 people in the state. Three other firms in Maryland employ 10,000 or more people, but they’re now spending at least 8 percent of their payroll costs on health coverage.

A Wal-Mart spokeswoman blamed passage of the bill on partisan politics.

“In allowing a bad bill to become a bad law, the (Maryland) 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,” said Sarah Clark.

The Maryland Chamber of Commerce has claimed that the new law violates the federal Employee Retirement Income Security Act, which supersedes “all state laws insomuch as they … relate to any employee benefit plan.”

Dan Fogelman, a Wal-Mart spokesman at the company’s headquarters in Bentonville, Ark., said the company could challenge the law.

“I’m sure that’s something that our attorneys are looking into as we decide our course of action,” he said.

Supporters say they’re certain the new law will stand.

Wal-Mart’s spotty reputation for employee benefits may have hurt the company’s effort to fight the proposal, but its deep pockets helped the company hire four lobbying groups to help sway lawmakers.

“Wal-Mart is an incredibly powerful corporation. And if you’re picking a fight with the biggest bully on the block, it’s going to be a harder fight,” said Jonathan Parker, national director of Americans for Health Care, a project of the Service Employees International Union. The union is backing similar measures across the country.

Because most large employers already provide valuable employee health coverage, the impact of these laws won’t be felt by many companies, said Ron Pollack, the executive director of Families USA, a nonprofit health care advocacy group in Washington.

“I think businesses that already provide good coverage are quietly saying to themselves that it’s about time that companies like Wal-Mart fulfill the same kind of responsibility that we’ve been providing all along.”