The Wal-Mart law, RIP

January 21, 2007

The decision by the 4th U.S. Circuit Court of Appeals last week to uphold a lower court's decision declaring Maryland's Wal-Mart law unconstitutional was greeted with a collective yawn in Annapolis. Small wonder. Few expected a reversal by such a conservative court. But more important, the debate over health care has moved on; it's gotten bigger than that.

The Fair Share Health Care Act was flawed from the start. It mandated that large employers spend a minimum percentage of payroll on health care benefits or pay the difference to the state. The reasoning behind the bill was understandable: Big companies that skimp on health benefits put pressure on others to do the same, and that places an unacceptable burden on taxpayer-financed programs such as Medicaid.

But the law applied to just one employer, Wal-Mart. That was unfair and, according to the court, a violation of a federal law that limits states' ability to regulate benefits.

Universal health care advocates fought hard to pass the Wal-Mart law but show little interest in resurrecting the issue today. The debate now focuses on Massachusetts, which has taken a much broader approach to solving the uninsurance crisis. It includes widening Medicaid coverage, placing a mandate on individuals to purchase health insurance, and requiring most employers to make a "fair and reasonable" contribution toward health insurance coverage.

In Annapolis, a proposed $1-per-pack increase in the tobacco tax would allow the state to provide Medicaid coverage to thousands of uninsured adults with children. It would also raise enough money to provide significant tax credits to small employers who want to make health insurance available to their workers.

Lowering Medicaid eligibility standards is considered a key first step in reducing the number of people without health insurance in Maryland (estimated at 788,000).

Still, the 4th Circuit's decision is relevant in this regard: The federal Employee Retirement Income Security Act (ERISA) that tripped up Wal-Mart could potentially do the same to Massachusetts-style employer mandates. If so, Congress and the White House will need to intervene. States need the flexibility to deal with a health care crisis that Washington has all but ignored.

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