HillaryCare Returns January 16, 2006; Page A14
Readers with long memories will recall that one of the reasons HillaryCare was defeated in 1994 was because of its unpopular employer mandate. Well, its diktat that all businesses provide health insurance is making a comeback, albeit at the state level and at first only for the largest companies. But all employers are on Big Labor's target list here.
That's the larger meaning of last week's events in Maryland, where the state legislature overturned the veto of GOP Governor Robert Ehrlich and passed a bill forcing any employer in the state with more than 10,000 employees to spend at least 8% of its payroll on health care or pay the state the difference. There are only a handful of companies that large in Maryland -- Johns Hopkins University and Giant Food, a grocery chain competing with Wal-Mart, among them. Only one meets all the criteria, however, so the legislation was dubbed "The Wal-Mart Bill," which in part it is.
But no one should think this will be an isolated political event. The state AFL-CIO threw everything it had into the bill, including a vow to withdraw support from any lawmaker who didn't vote to override the veto. Democrats who dominate both houses of the Maryland legislature went along. The national AFL-CIO now plans to use the Maryland law as a model for legislation in other states. Union chief John Sweeney has announced a campaign to enact "Fair Share Health Care Legislation" in more than 30 states. Washington and New Hampshire will be early targets.
The details vary by state, but already it's clear the new tax would eventually hit companies a lot smaller than Wal-Mart. In Rhode Island, proposed legislation takes aim at businesses with only 1,000 employees. In other states proposals would mandate payouts of 9% or more. Once the principle is established that employers must allocate a certain share of their payroll to health care, it becomes easier to gradually extend the mandate to all businesses.
Unions and Democrats argue that companies must be commanded to do this because employees without health insurance often turn up on Medicaid, which is busting state budgets. But rather than reform Medicaid to control its costs or stop its rampant fraud, the politicians find it easier to sock it to private business. One result will be that companies will create fewer new jobs, as in Old Europe.
As for Wal-Mart, it is hardly an ogre as an employer for 1.3 million Americans. It now offers an array of health plans to all full and part-time employees with monthly premiums as low as $23 for an individual and $65 for a family anywhere in the country (less in some areas). Employees can also choose to set up health savings accounts with Wal-Mart matching contributions up to $1,000.
The company doesn't disclose its health care spending. But last year officials told Maryland's legislature that Wal-Mart typically spends between 7% and 8% of its payroll on health care. In the fiscal year ending this month, the company expects to have spent $4.7 billion on all benefits (including health, dental, retirement and more) while turning a profit of about $10 billion. One perverse aspect of the Maryland bill is that Wal-Mart won't be able to count any savings from negotiating lower prices with doctors and hospitals toward the 8% threshold. So the bill works against the oft-invoked liberal goal of reducing the nation's overall health-care costs.
Wal-Mart hasn't said how it will respond to the new Maryland law, but we'd suggest at a minimum that it cancel its plans for a new regional distribution center in the state that would create about 800 jobs. Maryland's politicians need to understand that policies punishing business have bad economic consequences. Let a more enlightened state benefit from Wal-Mart's prosperity.
What's really going on here is an attempt to pass the runaway burdens of the welfare state on to private American employers. As we're learning from Old Europe and General Motors, this is bad news for both business and workers in the long run. The U.S. doesn't need a revival of HillaryCare on the installment plan.
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