A decision by the 4th U.S. Circuit Court of Appeals in Baltimore should cool the ardor of Wal-Mart bashers. But it may also increase the efforts of states, including Colorado, to plug the gaps in our national health care system.
The three-judge panel, on a 2-1 vote, upheld a lower court ruling throwing out a 2006 Maryland law forcing Wal-Mart – and only Wal-Mart – to spend more on employee health care.
Legally, the decision was no surprise because “class legislation” that targets a single person or group is always suspect. Maryland legislators attempted to get around this by forcing all corporations with 10,000 or more workers in that state to spend 8 percent of their payrolls on health insurance or pay the difference into a state fund. Four companies have more than 10,000 workers in Maryland, but only Wal-Mart – with 53 stores, two distribution centers and nearly 16,000 employees in Maryland – met all the criteria set out in the law.
Maryland legislators argued the reason other big employers escaped the mandate was that they were more responsible in providing health care benefits than the Bentonville, Ark., colossus. Appellate Judge M. Blane Michael, in a dissenting opinion, noted Maryland, like many states, faces explosive growth in Medicaid spending, caused in part by a decline in employer sponsored health insurance.
“In Maryland’s words, Medicaid ‘has been transformed into a corporate subsidy,’ ” Michael wrote, noting that a study by one North Carolina hospital found 31 percent of Wal-Mart employees were enrolled in Medicaid and 16 percent were uninsured.
The court majority, however, ruled the state law was trumped by a 32-year-old federal labor law, the Employee Retirement Income Security Act. Besides safeguarding pensions, ERISA was intended to allow big companies to set up uniform health benefits across the country, rather than wend their way through a maze of state-by-state requirements.
Strictly as a matter of law, the ruling is binding precedent only in Maryland, Virginia, West Virginia, North Carolina and South Carolina. But health care activists and union leaders generally conceded that a special effort to force Wal-Mart to meet what they consider its responsibilities appears to be a dead end.
One result is that you’re not likely to see another anti-Wal-Mart bill in this session of the Colorado legislature. A Maryland-style jab at Wal-Mart was introduced last year but died in committee.
That doesn’t mean Maryland’s law didn’t have consequences. Perhaps shamed by the campaign against it, Wal-Mart has in the last 18 months made its health insurance available to the children of part-time workers, reduced the waiting time before new employees are eligible for insurance and created a plan with monthly premiums as low as $11.
More important, the demise of laws singling out Wal-Mart will likely increase the impetus for states to pass comprehensive health-care measures. A recent survey by the Kaiser Family Foundation found 17 states increased access to health coverage in 2006, often to low-income children.
Last year, Massachusetts adopted a bipartisan law requiring state residents to obtain insurance, created a state-sponsored “connector” where they could go to buy it, and required all but the very smallest employers to provide insurance or pay a penalty.
Vermont and Maine also have enacted universal-coverage plans. Vermont aims to have 96 percent of state residents insured by 2010 through a mix of subsidies and employer contributions, plus a tobacco tax.
California Republican Gov. Arnold Schwarzenegger recently outlined a plan that would make uninsured residents purchase insurance and require businesses with 10 or more employees to either offer insurance or pay 4 percent of their payroll into a fund for the uninsured. On Wednesday, Pennsylvania’s Democratic governor, Edward Rendell, unveiled his own plan to cover his state’s nearly 1 million uninsured, though stopping short of a Massachusetts-style mandate.
In Colorado, Gov. Bill Ritter hopes to present his own comprehensive health insurance plan to the 2008 legislature, after the “208 commission” on health care reform established last year by Senate Bill 208 delivers its recommendations. But Ritter will probably soon issue an executive order joining other states in a purchasing pool to help reduce Medicaid drug costs to taxpayers and patients.
The courts’ voiding of the Maryland law thus means Wal-Mart has won a legal skirmish in the long-running health care battle. But like another famous victory, the Battle of Bunker Hill (won by the British), the fight between Wal-Mart and Maryland seems to mostly to have fired up the losing side – and mobilized health care reformers around the country.
Bob Ewegen (bewegen@denverpost.com) is deputy editorial page editor of The Denver Post.
The Associated Press and Bloomberg News contributed to this column.
