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News of the Day ... In Perspective

07/25/2006

Maryland “Wal-Mart bill” overturned in federal court

The Fair Share Health Care Fund Act, passed in Maryland earlier this year, is pre-empted by the federal ERISA law, ruled Federal District Judge J. Frederick Motz last week.

The bill required employers of more than 10,000 employees to spend at least 8% of their payroll on health benefits, or pay the difference to the state. In practice, it would have applied only to Wal-Mart.

The Judge ruled: “The Act violates ERISA’s fundamental purpose of permitting multi-state employers to maintain nationwide health and welfare plans, providing uniform nationwide benefits and permitting uniform national administration.”

Although at least 29 other states have considered similar legislation, promoted by AFL-CIO President John Sweeney, none have passed it.

The ERISA law, passed in 1974, protects big business from the expensive state insurance regulations that help make insurance unaffordable for individuals and small businesses (Wall St J 7/20/06).

Although applauded by the plaintiff, the Retail Industry Leaders Association, the decision was based solely on ERISA. The judge found against RILA’s argument that the law violated the Equal Protection Clause of the U.S. Constitution.

Unfortunately, the judge provided multiple ways for states to circumvent the preemption, notes AAPS General Counsel Andrew Schlafly. For example, the regulation could be structured as a tax rather than a fee.

“The judge even included a footnote saying that although he expressed no view about the Massachusetts plan, he implied that it would be upheld by his reasoning,” writes Schlafly.

Organized labor may have designs much more ambitious than unionizing Wal-Mart employees. According to Andy Stern, president of the Service Employees International Union, the goal is to coax or bully Wal-Mart into advocating national health insurance, putting business on the same side as labor.

“If Wal-Mart’s CEO, Lee Scott, were to come out and say, ‘We need a national health-care system that works for everyone,’ then it’s a whole new ball game” (Joshua Green, Atlantic Monthly, June 2006).

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