Pressure builds on large employers to provide worker health benefits

February 1, 2006

A new law in Maryland is creating a stir in health policy circles across the country as the debate escalates over the future of employer-based health coverage. Last month, the Maryland legislature approved a bill that basically requires Wal-Mart Stores to spend at least 8% of its payroll on employee healthcare or pay the difference to support the state Medicaid program. Union leaders and consumer advocates who backed the measure predict that it will generate similar action in many state capitols.

WASHINGTON, D.C.-A new law in Maryland is creating a stir in health policy circles across the country as the debate escalates over the future of employer-based health coverage. Last month, the Maryland legislature approved a bill that basically requires Wal-Mart Stores to spend at least 8% of its payroll on employee healthcare or pay the difference to support the state Medicaid program. Union leaders and consumer advocates who backed the measure predict that it will generate similar action in many state capitols.

Business organizations blasted the bill as doing little to expand access to healthcare for the uninsured and talked about challenging the legality of the new coverage mandate. While the Maryland law applies to employers with more than 10,000 workers, other states are looking at measures that may set a mandate on firms with only 1,000 or 2,000 employees, which could affect retail and restaurant chains.

The Maryland action reflects broader national concern about eroding employer health benefits. Wal-Mart has been under attack in particular for failing to provide coverage for half of its U.S. employees, which include many part-timers. However, employers note that most of the uninsured who have jobs work for small companies with fewer than 10 workers.

According to AHRQ, only 28% of American workers were offered plans in 2003 that do not require them to pay a portion of the health insurance premium, down from 35% in 1998. More than half of workers at small companies have access to no-premium coverage, compared with about one-fifth at large firms.