Wednesday, July 19, 2006

Walmart Is Smiling

Judge J. Frederick Motz of the United States District Court for the District of Maryland, has sustained Walmart's challenge to the Maryland Fair Share Health Care Fund Act. His opinion in the case of Retail Industry Leaders Association v. Fielder holds that the Act is preempted by ERISA. In reaching his decision, Judge Motz ruled that the industry trade association, rather than Walmart itself, had standing to bring the action.

In a nutshell, the Act imposed a "tax" on non-governmental firms doing business in Maryland that have 10,000 or more employees. The tax was in the amount of 8% of the firm's payroll in Maryland, but would be reduced dollar for dollar to the extent that the firm expends funds for employees for "health insurance costs." The Act defines "health insurance costs" to mean "the amount paid by [the] employer to provide health care or health insurance to employees in [Maryland] to the extent the costs may be deductible by [the] employer under federal tax law."

The class of employers potentially affected by the Act was small:
There are four non-governmental employers of 10,000 or more people in Maryland: Johns Hopkins University . . . , Northrop Grumman Corp. . . . , Giant Food Inc. . . . , and Wal-Mart. When enacting the law, the Maryland General Assembly anticipated that only Wal-Mart would be affected by the Act's spending requirement.
The important issue raised by the case are not those limited questions of standing, preemption, or the equal protection that were actually addressed by the Court. Rather, the principal issue is whether we can stop the continued erosion of the availability of affordable health insurance.

The Act was ham-handed. It singled out one company, although admittedly one that has a limited "likeability factor" because of its reputation for brutal cost cutting that inflicts pain upon both its employees and its suppliers. The Act was passed solely to make it appear as if the legislature was actively addressing the health insurance issue, when, in fact, the legislature was simply avoiding any creative attempt to grapple with the problem.

My sense is that there are "bad guys" in the health care debate. Insurance companies, for instance, have so much invested in the current system that they will move heaven and earth to oppose real reform. However, health care reform should be designed to accomplish its legitimate goal: the establishment of a system that provides broadly available and affordable heath care for all Americans. If some bad guys may get injured in the process, so be it. But the process should not be directed toward punishing businesses that we simply do not like.

1 comment:

Anonymous said...

Ham handed? Maybe.
But consider that a few months after the Maryland Act, an internal Walmart memo revealed that nationwide, a high proportion of its employees did not have health insurance and that a large percentage of employee children were recipients of federally funded, state run programs for children. In short, Walmart's health insurance benefit is the public dole.

Walmart is being targeted not because of animosity but because it has broken with the model of American employers providing health insurance. It has consciously adopted a European model of government (some say socialist) health insurance for the majority of its employees. Unfortunately, there is no adequate government program in the US, only a patchwork of inadequate and expensive stop gaps.

Massachusetts (with the support of a Republican governor) has passed a universal health care law, the details of which are not finalized. But at its core, it does have coercive provisions to get employers to offer an affordable minimum budle of services. It's a public/private modification of the Clinton plan. It may be threatened by this decision.

Health care is an economic, as well as moral, necessity. The old employer provided insurance model is not viable any more. But opponents of government insurance programs, with insurer backing, cry socialism.

Walmart, in the face of the Maryland law, as well as similar proposals in 30 states, now promotes the fact that it offers coverage to more employees with lower premiums and shorter tenure requirements.

Maybe they are getting the message.