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States consider making employers provide medical insurance

Since medical care is part of our basic cost of living, we are entitled to have it paid for by our employers. Some states, tired of paying the ever increasing costs of medical care for those who don't have medical insurance, are considering forcing employers to provide it. We should do this in Oregon.
May 6, 2005

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The relentless rise in health care costs is causing states and
businesses to fight over whose job it is to insure workers. And nearly
two dozen states, struggling with the growing burden of providing public
assistance to people with jobs but no insurance, are looking to shift
more of the financial burden onto the workers' employers.

Last month, for example, Maryland, which spends roughly $350 million a
year on health care for the uninsured, passed a bill requiring the
state's very largest employers to spend at least 8 percent of their
payrolls on health benefits for their workers. Lawmakers elsewhere,
including Connecticut, are considering legislation that may also require
some companies to provide coverage, either directly or by paying into a
state fund.

Some measures, as with a New Jersey proposal, would let companies bid on
state contracts only if they provided health insurance for their workers.

At the very least, some states would embarrass companies whose workers
are on Medicaid or other forms of state assistance by publishing the
employers' names - as Massachusetts has already done with a list of
companies including Dunkin' Donuts, Stop & Shop and Wal-Mart Stores
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Dunkin' Donuts says individual franchised stores, not the company, are
responsible for coverage, while Wal-Mart challenged the findings. Stop &
Shop declined to comment.

The Maryland bill may not presage passage of such measures in other
states, but employers and others say there is no doubt that the issue is
heating up around the country. Medicaid, the states' main public
assistance health care program, now eats up about 16 percent of their
budgets. Nationally, the number of uninsured is 45 million and rising.
And with federal funds expected to be scaled back by $10 billion over
the next five years, the states' burden seems likely to grow.

Some employers, though, question whether that national problem should
necessarily be theirs to solve.

"The focus of the debate is whether there should be an employer
mandate," said Ellen Valentino, Maryland director for the National
Federation of Independent Business, whose state group of small companies
opposed the legislation.

But backers of the Maryland bill, which seemed to take special aim at
Wal-Mart, the nation's largest employer, say the support for it there
indicates a growing recognition of the growing financial burden of
caring for the uninsured. They say taxpayers are unfairly supporting too
many companies' uninsured workers, who turn to government programs like
Medicaid or simply show up in the emergency rooms of hospitals
subsidized by the state to provide care to people unable to pay.

Jonathan Parker, campaign director of Americans for Health Care, a
union-led group in Washington that helped push for the Maryland bill,
said legislative pressure was rising in state capitals nationwide.
"We're going to see it in more and more states," he said, "and we're
going to see it sooner rather than later."

Mr. Parker's group points to people like the Smiths, a couple in
Portland, Ore. Cheryl Smith, 54, works as a nurse's aide at a private
residential care facility, making about $20,000 a year. Her husband,
Vern, 51, has diabetes and an array of conditions associated with the

Mr. Smith, a former security guard, has not worked for about three
years, and Mrs. Smith's employer does not offer insurance. After he had
a heart attack at the end of March, the couple faced enormous bills -
$68,000 for the hospital stay, $38,000 for doctors' fees, with more on
the way for other services.

"I personally don't know what to do with them," Mrs. Smith said.

An Oregon proposal to require all employers to contribute to a health
care fund failed in 2003, but its backers vow to revive the effort.
Oregon has reduced the number of people eligible for its state programs,
and Mr. Smith is among those who lost benefits.

Several other states, including Tennessee and Minnesota, have also been
dropping people from public programs or are considering such cuts as
they try to balance their budgets. "They are in fiscal crisis, and they
are looking at ways to cut costs, shift costs," said Jeff Munn, a senior
health care consultant at Hewitt Associates
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which advises employers on health care and a range of other matters.

"If history is a guide, a lot of these efforts will fail," Mr. Munn
said. "That said, it does feel like there's momentum around these efforts."

Only a few months ago, it seemed as if any momentum had stalled.
California voters narrowly defeated a proposal in November that would
have required large employers to pay more to insure their employees,
after a campaign by unions and other groups that focused much of their
energy on Wal-Mart.

But the Maryland bill's passage indicates that the issue remains very
much alive. "The movement to require employers to provide health
insurance coverage is by no means dead," warned the HR Policy
Association, a group of human resources executives, which urged its
members last month to take "the offensive" in coming up with solutions
to problems of the uninsured.

By the association's count, at least 10 states have looked into some
sort of requirement that companies contribute more to their employees'
health coverage. These "pay or play" bills require companies either to
directly provide coverage or to pay into some sort of state fund that
would help insure those workers. Late in April, the finance committee of
the Connecticut Senate reported out a bill aimed at companies with 5,000
or more employees. But similar legislation died in Washington State.

In Maryland, although Gov. Robert L. Ehrlich Jr., a Republican, is
expected to veto the bill, proponents say they believe they have enough
votes in January, when the Legislature is next to meet, to override his
veto. Democrats, who control both the Senate and the House of Delegates,
pushed for the measure.

Other advocates also see rising support. "It's gone kaboom," said Mark
Federici, director of strategic programs at Local 400 of the United Food
and Commercial Workers union, who says the support "is certainly a
reflection of the general frustration everyone is faced with" over
health care.

As in California, Wal-Mart proved to be a big target in Maryland. In the
legislation passed, the insurance obligation applied to the very largest
employers, those with 10,000 or more workers. Of that handful, according
to the bill's proponents, only Wal-Mart appeared to be below an 8
percent threshold; the company testified that it devotes 7 percent to 8
percent of its payroll to benefits.

One of Wal-Mart's competitors, Giant Food, another of the state's
largest employers, came out forcefully in support of the legislation.
Giant, which says it spends at least 20 percent of its payroll on health
benefits, already satisfies the requirements of the law.

Giant's support "really opened the door," said Vincent DeMarco,
president of the Maryland Citizens' Health Initiative, a coalition of
unions, consumer advocates and others pushing for the legislation.

By focusing on such a small group of employers, the proponents succeeded
in what a Maryland Chamber of Commerce official termed a "divide and
conquer" strategy toward business. "From a policy point of view, the
bill doesn't make any sense," said Ronald W. Wineholt, a vice president
at the chamber, arguing that because the legislation affected such a
small number of companies, it did not address the bulk of the working
uninsured. The bill was "more politics than policy," he said.

Exactly how much Maryland would save from the legislation is unclear. By
state calculations, Wal-Mart spends roughly $270 million on wages in
Maryland. If it were forced to pay another percentage point or two of
that toward health benefits, the additional amount would not exceed
several million dollars.

The bill's supporters, including Mr. Parker, say the legislators settled
on a partial approach to a problem everyone acknowledges is much larger.
"Conceptually, something has to be done," he said. He predicts more
activity this summer as his group and others try to capitalize on the
momentum and decide how best to focus their activities in the next
legislative session.

Wal-Mart and some others say that the legislation has unfairly singled
out the company, which has been frequently criticized around the country
for not offering more generous health benefits to its employees. "Taking
a shot at us is not a way to address all these issues," said Nate Hurst,
who handles government relations for the company, based in Bentonville,
Ark. Wal-Mart says that a little more than half of its 15,000 full-time
and part-time employees in Maryland who are eligible for coverage are
enrolled in one of its health plans. The company will not say how many
workers are eligible.

Other states are taking a more limited approach, requiring companies
that have state contracts or that receive tax breaks to offer insurance,
according to the HR Policy Association.

About 11 states, including Georgia, New Jersey and Vermont, have been
considering such laws. "I think it's probably a much easier requirement
to get enacted," Mr. Munn, the Hewitt consultant, said.

Few policy analysts expect the struggle between states and employers to
end anytime soon.

"It's a giant dispute that's going to bounce back and forth between all
these parties," said Mark Wietecha, chairman of Kurt Salmon Associates,
a consulting firm in Atlanta that advises hospitals and others about
health care issues. "The reality," he said, "is almost everyone is going
to try this."

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