Government

House panel debates pros, cons of state "Wal-Mart" bills

Republicans and Democrats differ over states' right to force businesses to pay for health insurance.

By Elaine Monaghan — Posted May 22, 2006

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Washington -- A nationwide push to pass state legislation requiring employers to cover their workers' health insurance has grabbed congressional lawmakers' attention.

This legislation, dubbed "fair share" by its main advocate, the AFL-CIO, raised temperatures at a meeting of a House Committee on Education and the Workforce panel. The measures' opponents said health costs already were hurting businesses while mandate defenders said states must act because of the strain uninsured workers put on everyone else.

The legislation, which the labor group is pressing for in 33 states, would force businesses over a certain size to devote a percentage of their payrolls to health care coverage or pay a fine. In 2000, the AMA rescinded an earlier policy of supporting employer mandates.

For the AFL-CIO, businesses that fail to offer health insurance or charge large amounts for it are shifting the cost to workers, other businesses and taxpayers. "Why should a company like Wal-Mart -- which made $10 billion last year alone -- be able to force taxpayers to foot the bill for their health care costs?" AFL-CIO President John Sweeney said in an earlier statement.

But Rep. Sam Johnson (R, Texas), chair of the employer-employee relations subcommittee, criticized the legislation, also called "Wal-Mart" bills because the retail giant often would be affected by the legislation. "Governments who value freedom and free enterprise do not tell businesses how to operate," he said.

His Democrat counterpart from New Jersey, Rep. Donald Payne, however, said that until lawmakers find a solution to rising health costs, "we must not stand in the way" of states striving to provide affordable health care.

Paul Kelly, senior vice president for federal and state government affairs at the Retail Industry Leaders Assn., said his members -- which include Wal-Mart -- already have enough incentives to provide competitive benefits. The group opposes mandates, which he said would prevent companies from designing plans to meet their work forces' specific needs.

The panel devoted considerable time to the case of Larry Drombetta, a National Retail Federation member and president and CEO of HR Stores, a shoe retailer. He made an impassioned plea to the committee to find a bipartisan solution to the problem. While his health care costs have increased 155% since 2000, "my business has not grown 155% in this same period," he said. "My group plan has become older and more costly to cover each year, what the insurance industry calls a 'health insurance death spiral.' "

The retail federation has turned to the courts to try to overturn employer mandate laws in Maryland and Suffolk County, N.Y. The group claims that the measures violate the Employee Retirement Income Security Act.

The law in Maryland would affect only Wal-Mart, as it is the sole company in the state with more than 10,000 employees that does not meet the requirement that it devote 8% of payroll to health insurance.

Gov. Bob Ehrlich, a Republican, rejected the bill, but the Democratic-dominated Legislature overrode his veto. The state is now considering a measure that would force smaller businesses to devote 4.5% of payroll expenses to health care.

No panacea

Hawaii is the only state to have adopted a universal employer mandate, imposed in the 1970s. Hawaii remains among the healthiest of states and has a relatively low number of uninsured residents, but the proportion has fluctuated little from the 10% mark it was at three decades ago.

From the Hawaiian perspective, employer mandates are no panacea. Paula Arcena, executive director of the Hawaii Medical Assn., says her group supports the mandate in principle but questions its effectiveness. Businesses try to get around it by employing more part-time workers, and the self-employed have no protections. The mandate has done nothing to prevent the emergence of the same problems seen elsewhere: Lack of competition among insurers and high liability insurance costs, she said.

Mila Kofman, associate research professor at Georgetown University, urged the congressional panel to look for measures that would encourage and support state initiatives. These efforts are designed to create a level playing field in the business community and prevent costs from being shifted on to taxpayers, she said.

The Maryland law should not be seen in a vacuum, she said, because the state also has cost-limiting measures in place. For example, it has a commission that sets hospital rates for the entire state.

It is "un-American" that 18,000 people are dying annually for lack of insurance, Kofman said, citing the Institute of Medicine.

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ADDITIONAL INFORMATION

State action

AFL-CIO efforts to get state legislation passed that would force employers to pay for health insurance is being tracked by the Retail Industry Leaders Assn., which opposes such bills. Here is an overview of the status of these measures.

Has a law; more expansive legislation pending: Maryland

AFL-CIO targeted states with no legislation yet: Alabama, Arizona, Delaware, Illinois, Indiana, New Mexico

Legislation has died: Mississippi, New Hampshire, Washington, West Virginia, Wisconsin

Legislation is under consideration: Alaska, California, Colorado, Connecticut, Florida, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee

Session adjourned without approving legislation: Georgia, Kansas, Kentucky

Source: Retail Industry Leaders Assn.

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