Wal-Mart, Maryland and Employee Insurance

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Sheilah Kast offers some thoughts on Maryland's decision to require Wal-Mart to increase spending on employee health insurance.


Fifty-three years ago, another Senate committee heard from Charles Erwin Wilson, who was then the CEO of General Motors. He was seeking confirmation to become secretary of Defense. Mr. Wilson told the committee that he believed what was good for our country was good for General Motors and vice versa. And many Americans agreed. GM and the other American auto giants dominated the nation's economy. Together with the labor union that represented their workers, they largely set the standard for wages, pensions and particularly health insurance for Americans on the job.

Today, GM, with its employer-paid medical insurance, is no longer the standard-bearer of big business in America. It has been replaced by Wal-Mart, the giant low-price retailer. Like GM a half century ago, Wal-Mart's connections to suppliers, customers and workers reach every corner of the economy. But unlike GM, Wal-Mart off-loads health insurance costs to its employees and even to taxpayers. Some states have found thousands of Wal-Mart employees or their children on Medicaid rolls, receiving government assistance for basic health care. The approach has worked for Wal-Mart's bottom line and has inspired other employers to off-load health-care costs also. Indeed, when GM reported multibillion-dollar losses last year, it pointed to competition from companies with lower health costs as a reason for its problems.

But this week, something happened in Maryland that suggests the future may not belong to the Wal-Mart model. The Maryland Legislature passed a law requiring companies with more than 10,000 workers in the state to pay at least 8 percent of their payroll for health care or pay the difference into the state's Medicaid fund. Maryland has four employers that big. Three of them already spend far more than that on their workers' health. Wal-Mart lobbied intensely against the bill, contending that most of its workers have health insurance and that the company shouldn't be forced to do more. Opponents argued nearly half the children of Wal-Mart workers in Maryland are not covered by health insurance.

Wal-Mart lost the battle in Maryland, but it pledges to fight similar bills now pending in at least 21 other state legislatures. Legislatures today are grappling with an update of Charles Wilson's philosophy. Is what's good for Wal-Mart good for our country and vice versa?

It's 18 minutes past the hour.

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