Maryland Seeks Answers for Uninsured After Wal-Mart Law Nixed

By | August 6, 2006

With Maryland’s groundbreaking Wal-Mart health care bill declared invalid by a federal judge, state officials are re-examining their options for providing medical care to many of the almost 800,000 people who have no public or private health insurance.

Key Democratic legislative leaders haven’t given up on the Wal-Mart law. They are looking for ways to tweak the legislation so that it will withstand judicial scrutiny and force the nation’s largest retailer to spend more money on health care for its workers or pay a penalty by contributing money to the state Medicaid fund.

But lawmakers and special interest groups want the state to move beyond the “Fair Share” Wal-Mart bill, which would have had only limited impact on the state’s overall health insurance problems.

Proponents of two competing plans — one similar to a new Massachusetts law and a second that would increase the cigarette tax by $1 a pack to raise money for health care — are already trying to build support for their proposals even though the General Assembly will not return to work until next January.

Senate President Thomas V. Mike Miller is among those not ready to give up on the Wal-Mart bill.

“What’s happening in Maryland is that all citizens of the state are subsidizing Wal-Mart because we are paying for their employees when they show up at emergency rooms at hospitals,” he said.

Dan Fogleman, a spokesman for Wal-Mart Stores Inc., said the company “offers affordable health insurance coverage to both full and part-time employees.”

“We are among the largest providers of private sector health insurance in the country with more than one million covered under our health plan,” Fogleman said. “The law that was struck down did nothing to control the cost of health care or improve access to health care.”

The Maryland law did not mention Wal-Mart by name, but Wal-Mart was the only company that did not meet the law’s requirement that corporations with more than 10,000 employees in the state spend at least 8 percent of payroll on health care or pay the difference into the state Medicaid Fund.

Unions and progressive groups that have been battling Wal-Mart over health insurance hoped to use the Maryland law as a wedge to enact similar laws in other states, but the campaign has been stalled by the ruling last month by U.S. District Judge J. Frederick Motz that the statute violated a federal law prohibiting states from mandating employee benefits.

Miller said he believes there may be a way to work around Motz’s decision. Kathleen Stoll of Families U.S.A., a nonprofit organization that advocates nationally on health care issues for consumers, agreed, saying the decision was very narrowly written.

“I think it is really very simple for the state legislature to tweak or make some minor amendments to the Fair Share legislation in order to overcome the objections raised by Judge Motz,” Stoll said. “My concern right now is that state legislators and advocates across the country understand that employee responsibility laws can still go forward in their states.”

J.D. Piro, an attorney for Hewitt Associations, a human resources consulting firm, disagrees. He interprets Motz’s ruling as a sweeping prohibition against state interference in employee benefits.

Motz was very clear in his opinion that states can’t mandate health care benefits because that area of the law has been pre-empted by the federal Employee Retirement Income Security Act, Piro said.

“The flaw is at the core of the Maryland bill. I don’t see how you can fix that,” he said.

Even the strongest supporters of the Wal-Mart bill acknowledge the state will need to do much more to help the growing number of people who have no insurance and often wind up in hospital emergency rooms for routine problems.

Maryland Business for Responsive Government, a business lobbying group, is advocating for a variation of the plan that became law in Massachusetts in April. Robert Worcester, president of the business organization, said the Massachusetts law is “a permutation of what we’ve been chasing for six years.”

The plan backed by Worcester would set up a state-run insurance exchange that would serve as a clearing house for insurance companies to hook up with people seeking insurance.

Worcester said the exchange would make insurance more affordable for the approximately 15 percent of Marylanders under 65 who are not insured by allowing them to buy insurance at reduced rates available to big companies.

Consumers would have more choices and would be able to use the exchange to retain insurance when they are between jobs, he said.

“We simply have to, as a society, find ways of ensuring the uninsured,” Worcester said. “If business doesn’t do something, then some incremental and ultimately total form of government run health case is going to be imposed upon the public,” he said.

Republican Sen. E.J. Pipkin, who sponsored a Massachusetts-style plan during the 2006 legislative session, said Maryland “can’t stay where we are now, with premiums skyrocketing and the number of uninsured skyrocketing. The state will either pick the path of more government control or more choice for consumers, and I’m hoping it’s the consumer path,” he said.

An alternative plan that would provide insurance to the neediest people who now have no coverage is being proposed by the Maryland Citizens’ Health Initiative, an organization that advocates for universal health care. The group claims religious, labor, business, health, and community organizations as members.

The key to their plan is an increase of $1 per pack in the tax on cigarettes, which would bring in an estimated $150 million to $200 million a year. Most of the money would be used to expand Medicaid coverage to about 50,000 people with incomes up to 300 percent of the federal poverty level. The plan also would set aside $15 million a year in grants to small business owners to help them provide insurance for employees.

“The health Maryland initiative is good policy and good politics,” Vincent DeMarco, president of the group, said. It will reduce smoking, provide health care to 50,000 people and “has overwhelming support among Maryland voters,” he said.

Ed Haislmaier, a research fellow at the conservative Heritage Foundation, said it may be “politically attractive,” but not realistic, to think that a cigarette tax can have any real impact on reducing the number of people without health care.

Pipkin’s bill, with its insurance exchange, could solve maybe half the problem without requiring new money, Haislmaier said. He said there is increasing interest on a bipartisan basis around the country in some kind of variation on the Massachusetts approach.

Miller said he thinks health care and cleaning up the Chesapeake Bay will be the two top priorities of the new legislature that will be elected in November.

He noted that Motz said in his opinion that in view of the perceived national health insurance crisis, “it is strongly in the public interest to permit states to perform their traditional role of serving as laboratories for experimenting in controlling the costs and increasing the quality of health care for all.”

Miller said the Massachusetts plan “has legs” and could serve as a basis for a Maryland health care plan.

“We’re going to have to move forward on this issue,” the Senate president said.

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