Last week, the state of Maryland became the first in the country to pass a bill — by overriding the governor’s veto — which requires large employers to spend a certain percentage of their budget on health insurance for their employees. Officially known as the Fair Share Health Care Fund bill, the measure was unofficially dubbed the “Wal-Mart bill,” as it was designed to ensure that Wal-Mart spends enough on its employees’ health benefits to prevent those employees from utilizing state benefits programs. Maryland’s move paves the way for future success in other state legislatures, but is this a transitory policy move, or will government intervention ultimately be necessary to ensure that Americans get the health coverage that they need?
When the legislature in my new home state, the Maryland General Assembly, resumed this year’s 90-day session in January, it had an important decision to make. Would the Assembly capitulate to Governor Robert Ehrlich’s veto of the “Fair Share Health Care Fund” bill after last year’s session concluded, or marshal enough votes to override the veto? While both houses of the Assembly have a Democratic majority, the vote required a three-fifths majority, so passage was not necessarily assured. (See Washington Post article.) However, within a day of the Assembly resuming its work, enough votes were found in each house to allow the Assembly to override the governor’s veto. (In another worker-friendly move, the Assembly has also just voted to override the governor’s veto of a $1.00 increase in the state minimum wage.)
What Maryland’s Fair Share Health Care Fund bill does is as follows: any private employer in Maryland who employs 10,000 employees in the state is required to spend 8% of its payroll on employee health benefits or make a contribution to the state’s insurance program for the poor. While the bill’s application appears straightforward, it was admittedly designed in a way that would target Wal-Mart. Four employers in Maryland, Johns Hopkins University, Giant Food, Northrup Grumman, and Wal-Mart, employ over 10,000 workers in the state, but among those four employers, Wal-Mart is currently the only one that does not spend the amount required by the bill for its employees’ health benefits.
Other states are sitting up and taking notice, including Washington, West Virginia, Kentucky, New Hampshire, and Ohio, for starters. Some news coverage of the issue predicts that similar bills will be introduced in as many as 30 states. (See Los Angeles Times article.) While these bills primarily target Wal-Mart and other mega-employers, there are states, like Massachusetts, that would also require smaller employers, even less likely to offer coverage, to provide coverage to their employees. For example, the Massachusetts measure would require all employers with 10 or more employees to provide coverage, while a California measure passed in 2003 — later repealed through a business-sponsored ballot initiative — would cover all businesses with 50 or more employees.
The victory in Maryland is certainly worth celebrating, and is obviously an inspiration to similar efforts in other states. However, is it the beginning of a significant trend or just a temporary fork in the road while the trend in health insurance coverage mostly moves in a different direction? The number of employers providing health insurance coverage for their employees has already declined significantly in recent years, while the employees’ share of premiums has outpaced wages. (See Short-Changed: critical condition/healthcare.) We’ve previously questioned the wisdom of entrusting employers to adequately cover their employees’ health care needs. (See Should Corporations Be Responsible for Health Care and Pensions?
One of Governor Ehrlich’s staff members fumes that Maryland’s move paves the way for “socialized medicine.” (See Seattle Times article.) One might find that confusing at first blush: how does a measure that requires employers to pay more and the government to pay less for health care equal socialized medicine? However, the passage of more bills like Maryland’s may force policy makers, and the American public, to question whether Americans would be better served by a move away from having employers foot the bill for health care coverage. One editorial about the Maryland decision defines the issue as follows:
Employers don’t pay workers’ car insurance, homeowners’ insurance or grocery bills. They shouldn’t be responsible for picking up their health care tab, either….The United States is alone in the world in tying jobs to health care. The country should be moving away from employer-based health care and toward a tax-financed system that provides health care to all Americans, regardless of where or if they’re employed. What has happened in Maryland should be a wake-up call to businesses all over America to get on board with reforming health care. The best action for employers to take: support the expansion of the existing, tax-financed Medicare program for seniors to cover all Americans.
See Des Moines Register editorial. The most significant aspect of the Maryland victory may not be a significant increase in the number of workers with health insurance. (Wal-Mart has not released an analysis of how many employees increased spending would add to its rolls.) It may be the start of a national dialogue about how best to fix our broken health care system, and whether the government can do a better job of providing adequate health care to its citizens than employers are currently doing for their workers. This dialogue hasn’t happened since Bill Clinton was President, and Hillary Clinton crafted a much derided health care plan which ultimately went nowhere. (See Los Angeles Times article.)
The AFL-CIO just issued its strongest statement yet in favor of universal health coverage. The federation’s president, John W. Sweeney, said, “We need a simple national health care plan that covers everybody – the failure of Bush’s complicated Medicare prescription drug benefit demonstrates that.” Sweeney highlighted that the health system was badly broken because it has left 45 million Americans uninsured and had undercut the competitiveness of American corporations by saddling them with soaring health costs. (See New York Times article.) However, Sweeney then unexplicably said that the unions would continue to support the campaigns in 30 states to enact Maryland-style bills. Let’s hope the national dialogue advances quickly enough that long before the 30th bill is passed, the nation is focused on the need for universal coverage rather than the temporary Maryland-style fixes.
How will the behemoth Wal-Mart respond? It’s fuming, making the usual noises about exploring its options and considering legal action. (See AP article.) Far more interesting, however, is Wal-Mart’s advertising response. Its new campaign will be called “Save More, Smile More,” and will feature a series of lifestyle vignettes that show people using Wal-Mart merchandise. Wal-Mart’s iconic smile appears in each scene. Just what we all need: more Wal-Mart smiley faces!
Wal-Mart has more problems than a smiley face will fix. So do its employees who continue to lack health care coverage, and in many case, are forced to relying on government assistance to get the minimum care they need for themselves and their families. Until we have a better solution, just listen to one columnist’s analysis:
Your faithful correspondent has hit upon the perfect solution to the festering health care and retirement funding crises in this aging country.
It’s a two-step program, so grab a pencil if you need to take
? Don’t get sick.
? Don’t retire.
That may be the best solution most workers have right now, and it’s clearly not enough. No amount of smiling will fix that.