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Wal-Mart Objects to Health Insurance Bill Passed by Maryland's Senate, House

By Ryan Basen
Maryland Newsline
Tuesday, April 5, 2005

ANNAPOLIS - Health care advocates applauded Senate Finance Committee Chairman Thomas Middleton  as he walked down the steps of the State House Tuesday afternoon.

Middleton, D-Charles, had just helped to pass a measure calling for Maryland's largest companies to spend 8 percent of their payroll on health insurance for their employees. Advocates were elated.

A nearly identical bill, sponsored by Delegate Anne Healey, D-Prince George's, passed the House March 24 and will be heard in the Senate Finance Committee. Middleton expects that bill to merge with the Senate version.

The proposal is is being championed as an important policy to reduce the ranks of Maryland's 740,000 uninsured citizens and save the state millions in insurance costs.

But those opposed to the bill, including Republican Gov. Robert Ehrlich, say it would hurt the state's business climate and could cost some Marylanders their jobs.

"This has got to be the worst bill that I've seen" in 10 years in the Legislature, said Sen. Nancy Jacobs, R-Harford.

The bill, sponsored by Sen. Gloria Lawlah, D-Prince George's, requires for-profit companies with 10,000 or more Maryland employees to allot at least 8 percent of their payroll to employee health benefits. Non-profits would have to spend 6 percent.

Companies that don't meet that standard would be fined up to $250,000 annually, in part to help support the state's Medicaid operations.

The measure, which would go into effect Jan. 1, 2007, passed the Senate 30-16 Tuesday. It would apply to three institutions: Wal-Mart, Giant Food Inc. and Johns Hopkins University (a non-profit), although Giant and Hopkins already meet the bill's stipulations.

Two other companies are approaching 10,000 Maryland workers.

The point of the bill, proponents said, is to ensure large companies pay their share of health insurance costs so that the state and other companies no longer have to subsidize them.

Wal-Mart, for example, costs states heavily by providing insufficient health care coverage, according to a New York Times report -- including a $32 million setback to California alone in Medicaid costs in fiscal year 2004.

If the bill fails, said Sen. Paul Pinsky, D-Prince George's, "it's going to come right back to us to fund" Medicaid for those uninsured Wal-Mart employees.

"It's time," Pinsky added, "for the state to stop subsidizing corporations."

Maryland also needs this bill, Middleton said, because the federal government is expected to make more Medicaid cuts, increasing states' burden to treat the uninsured and necessitating that companies pitch in.

"It serves a warning out there that government is not going to be the end-all for health care," Middleton said. "Employers in the state of Maryland that are providing substantial benefits to their employees are not worrying about this at all."

Wal-Mart provides health insurance to about 52 percent of its Maryland employees, spending between 7 and 8 percent of its Maryland payroll on health benefits.

"If they're almost there," said Sen. Katherine Klausmeier, D-Baltimore County, "I don't know what the big complaint is."

The complaint is this: The bill unfairly targets Wal-Mart, said spokesman Nate Hurst. However, the company is not opposed to spending 8 percent, he said.

Another complaint of opponents is that the bill would damage Maryland's business climate.

It would dissuade large companies from moving into Maryland, Jacobs said, and could influence them to cut jobs to get under 10,000 employees in Maryland, which would be the first state to adopt such a measure.

And Sen. Andrew Harris, R-Baltimore County, noted that companies with at least 500 employees nationally only spend 7.3 percent of payroll on health insurance.

Ehrlich's spokesman said the governor "is not enthusiastic" about the bill. "It is yet another tax increase that has been proposed by our Legislature," said spokesman Henry Fawell. "It sends a chilling message to companies that are thinking of moving to Maryland."


Copyright 2005 University of Maryland Philip Merrill College of Journalism

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