Unions Promote Legislation Forcing Large Employers To Pay For Health Benefits

The AFL-CIO has announced it is putting pressure on lawmakers in 33 states to pursue legislation requiring large employers, including Wal-Mart, to provide health insurance to employees or contribute to Medicaid expenses.

The AFL-CIO, a federation of unions representing nine million workers, launched its "Fair Share Health Care" campaign on January 5. The organization said it is working with state legislators to introduce and pass laws that would force large employers to offer their workers affordable health care benefits or contribute a percentage of payroll to state-sponsored funds that would provide benefits to the uninsured. The 1.8-million member Service Employees International Union has a similar initiative, "Americans for Health Care."

AFL-CIO President John Sweeney said, "We cannot afford to stand by and wait for the federal government to take action on these issues critical to working families—and we won’t."

Citing a Commonwealth Fund study, Sweeney said more than one-quarter of workers in companies with 500 or more employees lack employer-provided health insurance.

Among the campaign’s main battlegrounds is Maryland, where legislators were expected to override Gov. Robert Ehrlich’s veto of a bill that would require companies with more than 10,000 employees to spend a minimum of 8% of payroll on health care benefits or contribute to Maryland’s health insurance program for the poor. Wal-Mart is currently the only company in Maryland that would be affected by the bill.

While the state bills vary, most proposals mandate that employers above a certain size commit between 8% and 11% of their payrolls to health care benefits or pay an equivalent amount to a state fund that would subsidize insurance coverage for low-income workers. The AFL-CIO said it would also focus on legislative efforts in states including Colorado, Connecticut, Wisconsin, Iowa, Georgia, Michigan, and Washington.

Bruce Josten, the U.S. Chamber of Commerce’s executive vice president for government affairs, criticized the Maryland initiative. "States should be exploring ways to lower health care costs and help small business owners gain access to affordable, quality care rather than wasting time on half measures like this that ignore the reality of the health care crisis in this country," Josten said.

The Chamber also pointed out that forcing large employers to pay for a specified amount of health care benefits may violate the federal Employment Retirement Income Security Act (ERISA).

Proponents of the unions’ approach argue that—far from creating a less competitive business environment—laws that lead to increased health insurance coverage rates among a state’s residents should lower premium costs for companies currently providing health care benefits and reduce the burden on state taxpayers.

"Businesses that play fair and provide health care for their workers are forced to shell out over $30 billion to cover those other businesses’ workers," Sweeney asserted. "That’s in addition to the estimated $150 billion they spend on their own workers’ health care costs. Meanwhile, Medicaid’s skyrocketing costs are being driven even higher by profitable employers who tell their workers to sign up for the program rather than give them health care."