Maryland's first-in-the-nation law to compel Wal-Mart to spend more on employee health care suffered another setback yesterday, providing fresh incentive for legislative leaders in Annapolis to explore ways to boost insurance coverage that do not involve the retailing giant.
The U.S. Court of Appeals for the 4th Circuit upheld a lower court finding that struck down Maryland's legislation. A divided three-judge panel ruled that the state's Fair Share Health Care Act was incompatible with federal rules that promote uniform treatment of employees.
"In short, the Fair Share Act leaves employers no reasonable choices except to change how they structure their employee benefit plans," Judge Paul V. Niemeyer wrote for the majority, adding that such a constricted choice also violates the federal Employee Retirement Income Security Act, or ERISA.
With the future of the so-called Wal-Mart law in doubt, state legislators are planning to resurrect a host of other possible health care solutions during the 90-day legislative session that began last week, including an expansion of the Medicaid program to low-income adults, a reduction in insurance premiums for small businesses and a requirement that the state's highest-paid workers buy insurance coverage.
Some leading supporters said the 2005 bill prompted the nation's largest retailer to improve its employee benefits even though the law never took effect.
"I do think Wal-Mart has changed its behavior since all of this has taken place," state House of Delegates Speaker Michael E. Busch said, adding that he was not surprised by the ruling and didn't know how the chamber would proceed.
"Part of this was just wanting Wal-Mart to be a good corporate citizen and provide the same health care benefits that all of the other big corporations do," Busch said.
State Attorney General Douglas F. Gansler now has 14 days to decide whether to ask the entire 4th Circuit panel to review the decision.
"At this point, the office has just received the opinion, and we are currently reviewing and evaluating what it says," Christine N. Hansen, a spokeswoman for Gansler, said in an e-mail yesterday. "Since we just received the opinion, I can't comment until we have fully reviewed it."
Steve Kearney, a spokesman for Gov. Martin O'Malley, said that a decision on whether to support an appeal of the ruling had not been made. "We continue to believe that fairness is critical to making health care more affordable," Kearney said.
During the campaign, O'Malley, a Baltimore Democrat, expressed support for shifting more of the burden for health care costs to the state's largest employers. O'Malley also advanced the idea of improving health care coverage by expanding the buying pool for small employers and creating a state fund to pay for expensive cases -- which could reduce premiums.
Leaders in the Senate and House said yesterday that there was little appetite for continuing to battle over employer mandates similar to the one in the Wal-Mart law.
"If the attorney general's office calls me for advice, I would tell them not to appeal," said Sen. Thomas M. Middleton, a Charles County Democrat and chairman of the Senate Finance Committee. "First of all, Congress needs to loosen up the ERISA laws."
Senate President Thomas V. Mike Miller refused to abandon hope, however.
"We're going to try to work around what the [court's] majority said and comply with the law," Miller said. "But at the same time, we can't allow 60 percent of Wal-Mart employees' kids to go without health insurance and use the emergency rooms for care. There has got to be some relief for Maryland and the other states."
Middleton, whose committee handles health care legislation, said that the state Senate is looking at a more comprehensive approach to health care "accessibility and affordability" this year, but that a plan has not been devised.
"We've got to decide what the package is going to be, how much it's going to cost and how to get to it," he said. "I wouldn't say that we've ruled out employer mandates. Some states have it as part of their comprehensive plans. So we're going to be looking at what Massachusetts has done, the California plan, the New York plan and the New Jersey plan."
Del. Peter A. Hammen, who is crafting a bill to expand health care coverage in the state, said he would not include an employer mandate but would monitor legal challenges to legislation in Massachusetts that requires employers to provide coverage.
Employer groups praised yesterday's court decision and pledged to support other ways to provide health care coverage to more Marylanders. But those representing small business added that there are limits.
"Our members tell us they would like to provide insurance, but they can't afford it," Ellen Valentino, Maryland state director of the National Federation of Independent Business, said in a statement.