Maryland Requires Retailers to Boost Health Care

The State of Maryland has passed a law requiring large retailers, like Wal-Mart, to pay more into their employee health-care plans. The move's sparked a legal battle and a nationwide debate about who's responsible for America's health.

ED GORDON, host:

From NPR News, this is NEWS AND NOTES. I'm Ed Gordon.

Wal-Mart CEO, Lee Scott made news yesterday at the National Governors Association winter meeting. He previewed a series of new healthcare initiatives that will expand coverage to more of its 1.3 million employees. The move comes in response to growing criticism of the world's largest retailer. Less than half of Wal-Mart's employees are currently covered by the company's healthcare plan, and five percent of its workers depend on Medicaid.

More than 20 states are working on bills that would force large employers like Wal-Mart to put profits back into employee health benefits. Maryland's legislature recently passed the first such bill, but not without starting an unprecedented legal battle that could last for years. From member station WAMU in Washington, D.C., Sarah Hughes reports.

SARAH HUGHES (Reporter, WAMU):

About 17,000 people work at Wal-Mart stores in Maryland, including 49-year old Cynthia Murray. For about the past five years, she has worked in the fitting room at a Wal-Mart in the suburbs.

Ms. CYNTHIA MURRAY (Wal-Mart Employee): I really like my job. I like to help people who come in and want to try different clothes on. They may ask my opinion, or they may need something else besides what they're trying on.

HUGHES: But Murray says she doesn't like her healthcare options. When she looked into the health plans provided by Wal-Mart a few months ago, she couldn't find one she could afford. She took into account the cost of the monthly payment and the deductible and her salary of about $9.50 an hour.

Ms. MURRAY: I didn't think it was feasible for me, for my budget that I live on. And I mean, I don't have a high budget here. I'm just a normal person paying rent, gas, electric, you know what I mean.

HUGHES: Murray decided to go without insurance. Many lawmakers in Maryland say it's the responsibility of big companies like Wal-Mart to help workers like Murray get out of the tight spot. Senator Brian Frosh.

Senator BRIAN FROSH (Democrat, Maryland): I don't think it's asking too much for one of the largest corporations not just in the United States, but in the world, to help shoulder some of the burden of their employee's health and welfare.

HUGHES: Maryland lawmakers in January approved the bill requiring private companies with more than 10,000 employees in the state to spend at least eight percent of their payroll on health insurance, or pay into the state's health program for the poor. The law is scheduled to go into effect next year.

Wal-Mart is calling the law bad policy. A company spokesperson declined an interview, but a statement voiced by Sarah Clark and posted on the company's website contends that the bill will not solve Maryland's uninsured problem.

Ms. SARAH CLARK (Spokesperson, Wal-Mart): There are 786,000 uninsured people in the state of Maryland, and less than one half of one percent work for Wal-Mart.

HUGHES: Wal-Mart also says it's generally doing more to help workers access health insurance across the country. In an email, company spokesperson Dan Fogelman wrote that Wal-Mart will make a health plan with a lower premium of $11.00 a month available to more of its workers, and he wrote that Wal-Mart recently enrolled 70,000 of its workers in a health plan, and that about 80 percent of those surveyed said they were previously uninsured.

Wal-Mart is not challenging the Maryland law, but a trade group that represents Wal-Mart and other large retail companies is.

Mr. PAUL KELLY (Spokesperson, Retail Industry Leaders Association): We see the Maryland law as a threat to our industry and to the potential growth of other retail and other businesses in that state.

HUGHES: Paul Kelly is the spokesperson for the Retail Industry Leaders Association or RILA. It filed a lawsuit in federal district court in Baltimore earlier this month. Kelly says the law lets states micromanage large companies. He says state government isn't in the best position to decide how to manage company health plans, the company is.

Mr. KELLY: Retailers and other businesses need the flexibility to design a benefits package in a way that meets the unique aspects of their workforce. The retail workforce is unique. It is younger than most other industry workforces. There is more turnover. And in addition, there are more part-time workers. So we have to have the flexibility to develop a package that meets those needs.

HUGHES: In its lawsuit, RILA is arguing that the Maryland bill does not apply to Wal-Mart and other large employers because it's preempted by a federal law on health plans. Supporters of the Maryland bill say they're not worried about the lawsuit.

Naomi Walker is with the AFL-CIO, which helped craft and abdicate for the Maryland bill.

Ms. NAOMI WALKER (AFL-CIO): We had several prominent lawyers in the field take a look at the Maryland bill and they think it's fine and doesn't violate the federal law on this issue.

HUGHES: Walker says the Union is using the Maryland law as blueprint for other similar proposals around the country.

Ms. WALKER: We see the Maryland bill as a model for our work in other states. We've taken the Maryland bill, turned it into a model piece of legislation, gotten it around to state legislators and activists all around the country; and so far it's been introduced in 24 states.

HUGHES: Groups representing large retail companies like RILA say they are also organizing and will fight the proposals.

For NPR, I'm Sarah Hughes.

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