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A Modest Step Toward Fixing Our Health Care System

Huck Gutman

Almost unnoticed last week, a federal judge ruled that a recent Maryland statute requiring Wal-Mart to spend more on health care was invalid under federal law.

The state required, through its Fair Share Health Care Fund Act, any employer with more than 10,000 Maryland employees to spend at least 8 percent of its payroll on worker health care. An employer who spent less would be obliged to pay the difference in taxes to the state. That money would be dedicated to a state medical assistance program.

Maryland's legislation was remarkably popular. A Washington Post poll found that 77 percent of registered voters supported it.

Those voters understand the simple truth: There is no free lunch. Any employer who does not pay for health insurance just passes its workers' medical bills on to others. Either to other employers in the form of higher premiums or to the taxpayers, who fund Medicaid. As the Speaker of the Maryland House, Michael E. Busch, observed, "When large employers don't provide health benefits, the rest of us pick up those costs."

His legislative colleague, Maryland Senate President Mike Miller was more blunt. "These guys are billionaires," he said, referring to the Walton family, which owns Wal-Mart. Christy Walton ranks as the sixth wealthiest American, with a fortune of $15.7 billion, tied with Jim Walton. Altogether, five of the ten richest Americans are Waltons, with close to $80 billion between them. That's more than Bill Gates and Paul Allen combined. "We're not going to let a big Arkansas corporation, protected by their contributions to the Republican Party, avoid their basic responsibility to the citizens of Maryland."

Someone pays for health care for Wal-Mart's employees -- only it often isn't Wal-Mart

The large retailers would rather defend stockholders who reap large profits than provide health care for their employees. So Wal-Mart, (and Target, and K-Mart, and Kohl's), in the guise of the Retailers Industry Leaders Association, took the Maryland legislation to court. They feared that the legislation would hurt their bottom line and that, if the Maryland legislation worked, many other states would enact similar laws. And they won in court.

"The decision sends a clear signal," warned Sandy Kennedy, president of the trade organization, "that employer health plans are governed by federal law, not a patchwork of state and local laws."

Kennedy read the District Court decision correctly. Judge J. Frederick Motz ruled, as he wrote, "in accordance with long established Supreme Court law that state laws which impose health or welfare mandates on employers are invalid under" the Federal Retirement Income Security act of 1974.

In other words, if it's broke, and our medical insurance system certainly is, the states shouldn't fix it.

But Judge Motz's ruling need not be the end of the matter.

If a federal law is needed, legislation should be introduced in the Congress -- and passed forthwith. Any corporate entity engaged in interstate commerce that has 1000 or more employees engaged would be required to spend at least 8 percent of its total wages on employee health care. (And let's include executive compensation, so those huge executive bonuses and stock options we read about so often have a real cost to the corporation.) Any corporation not spending 8 percent would have to make up the difference in a supplemental payment to Medicaid.

In addition, the law should go beyond what Maryland required not just by changing the numbers from 10,000 employees to 1000, but also by inserting a requirement for rough equality. All employees should have to receive some of the health care benefits -- they could not be distributed only to upper-echelon management in the form of Cadillac plans for some, and no health care for everyone else. Even part-time employees should be entitled to partial benefits.

Support for federalizing the Maryland law comes from an unexpected source. Counsel for the Retailers' Association Eugene Scalia, son of arch-conservative Supreme Court Justice Antonin Scalia, told reporters after the ruling went in his favor, "Attempts to address the problem are going to require a federal response, not a patchwork of state and local mandates." Scalia acknowledged, "It's widely recognized that employers and employees need more assistance addressing problems with rising health-care costs."

How right he is. A federal response is needed. It's time to get the Wal-Marts, the K-Marts, the Hiltons, the Tyson Foods -- all those employers of clerks and chambermaids and chicken processors -- to start paying something for their workers' health care.

Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Huck Gutman

Huck Gutman

Huck Gutman, a professor at the University of Vermont, was formerly Chief of Staff to U.S. Senator Bernie Sanders (I-VT).

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