States Weigh Measures Forcing Employers To Provide Health Benefits
State legislatures across the country are considering measures that would require employers over a certain size to provide health care benefits to workers or pay a tax or assessment in lieu of offering benefits. Retail chain Wal-Mart, which employs large numbers of low-paid workers receiving public health care assistance, is at the center of many of these initiatives.
As part of its "Fair Share Health Care" campaign, the AFL-CIO is backing legislation in more than 30 states that would require or otherwise pressure large employers such as Wal-Mart to pay their "fair share" of the cost of health care for their employees. According to a report released by the AFL-CIO in March, Wal-Mart is at the top of the list of employers pushing workers into state-provided health care programs in at least 19 states. "On top of its health care subsidies, Wal-Mart has wrung at least $1 billion in economic development assistance from state and local governments over the past 20 years," the report asserts.
As the cost of providing Medicaid to low-income residents continues to rise, many state lawmakers are considering some version of what has become known as the "Wal-Mart Bill." In January, Maryland passed the first such law in the country, requiring companies with more than 10,000 employees to spend at least 8% of their payroll on health care benefits. The Maryland law, which is expected to face legal challenges, would only affect Wal-Mart, as the other large employers in the state already meet the payroll threshold.
The proposed legislative remedies to the problem for employers failing to provide affordable coverage to employees vary from state to state. Most states would exempt smaller employers from the requirement that they spend a set percentage of their payroll on health benefits for employees. The future of these proposals will depend in part on whether the Maryland law is found by the courts not to violate ERISA or other federal laws. In addition to weighing a payroll tax, some states are compiling and making public lists of companies with employees on Medicaid in an effort to embarrass these employers into changing their benefit practices.
Meanwhile, legislators in Massachusetts are preparing to enact an ambitious health care plan that would, its proponents claim, ultimately cover most of the uninsured in Massachusetts. Following protracted negotiations between leaders of the state's House and Senate, legislators agreed to drop a House proposal that would have required all companies with more than 10 employees that do not provide health benefits to pay a tax of between 5% and 7% of their payroll. Instead, the bill would impose a $295-per-employee annual fee on employers with more than 10 workers who do not provide health insurance. The fee is intended to cover the cost of free health care used by workers who lack insurance. The law is expected to require individuals to purchase a basic level of health coverage, with the state providing subsidies to those who cannot afford the full cost of insurance.
