Law Aimed at Wal-Mart
Hard to Replicate
By REED ABELSON and
MICHAEL BARBARO, NYTimes on the Web, January 16, 2006
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.
"Let's light the torch. Let us lead the way," said Senator Gloria G.
Lawlah, a Democrat who sponsored the bill.
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.
For all the unions' success in Maryland, though, it is doubtful that the
campaign will steamroll across the country, policy analysts say. 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
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.
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
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 a thousand or two thousand employees in that particular state, could affect
dozens of other corporations, like McDonald's and the CVS Corporation, the
"The broader the scope of the attack, the broader the counterattack that will be
mounted," said Prof. Carl Van Horn, director of the John J. Heldrich Center for
Workforce Development at Rutgers University, who 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. "It's likely this will go to court," Mr. 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, Mr. 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.
"Legislators in both parties are very concerned about the health care crisis in
Rhode Island," said Ms. 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. Ms. Rice estimates that of
38 employers with more than 1,000 employees, only 6 do not meet the 8 percent
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 Mr. 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
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
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. "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
"All we're doing is playing squeezing the balloon," he said.