The Wal-Mart decision

July 21, 2006

It didn't take long for the spin to start on the decision of U.S. District Judge J. Frederick Motz to strike down Maryland's "Wal-Mart law." The head of the state's Department of Business and Economic Development uses the law as Exhibit A in his insufferable campaign to bad-mouth Maryland's business climate. Our (better) argument against the law is that requiring large employers - in effect, only Wal-Mart - to devote 8 percent of payroll toward employee health care was unfair and selective. But Judge Motz's decision had nothing to do with either concern. He found that it violates a federal law that governs health and pension benefits.

Commonly known as ERISA, the Employee Retirement Income Security Act was approved by Congress in 1974 primarily as a way to ensure that employees receive promised benefits. But it also places limits on states' ability to regulate those benefits, particularly with large employers. This has long been a controversial element of ERISA, and it's exactly what tripped up the Wal-Mart law.

Nevertheless, supporters of the Wal-Mart law should be pleased with what they've accomplished. The threat of its enforcement (and duplicative efforts in other states) successfully pressured the retail giant to expand its health benefits program and even build in-store health clinics.

The action also brought to light an important point in the health care debate: When workers are uninsured, or underinsured, by marginal employer benefits programs, the rest of us pay for it. Not only because of the cost to Medicaid but because the expense is also passed along to private insurers - and ultimately to businesses and their employees. Thus, a company such as Wal-Mart gets off cheap and any competitor that doesn't follow its lead winds up helping underwrite its work force - as do the rest of us.

Maryland Attorney General J. Joseph Curran Jr. has promised to appeal the ruling, and that's his obligation. The legislature approved the law overwhelmingly. More troubling is the pledge made by state Senate President Thomas V. Mike Miller to devise legislation to get around the decision. Such insta-wailing gives credence to the charge that the Wal-Mart law was nothing more than a highly partisan sop to unions in an election year.

States such as Maryland have become laboratories for health care reform. A Massachusetts plan to extend health coverage to all uninsured residents by next year is a good example of what can be accomplished at the state level. The federal government, on the other hand, has a dismal record in this area. If Congress truly wants in on the action, making sure ERISA doesn't impede states' efforts would be a good start.

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