Behind the curtain in the war on Walmart

Brendan Miniter:

With the war on Wal-Mart now heating up in nearly three dozen state legislatures, I put a call in to someone who was in on the ground floor in pushing to force the retailer to spend more on health care for its employees. What Maryland's Delegate James Hubbard, a Democrat from Prince George's County, had to say was revealing of both why he backed his state's "Wal-Mart bill" and what this fight is really about: expanding Medicaid and other taxpayer-funded health-care entitlements.

Let's first understand that the drive to enact anti-Wal-Mart legislation has very little to do with the retail giant except in two respects: dipping into its very deep pockets, and using the controversy surrounding the company to mask the larger agenda of expanding already-bankrupt entitlement programs. Of course, in this war legislators have a ready made ally in the AFL-CIO, which has its own reasons for going after the nonunionized company.

With that, let's turn to Mr. Hubbard. He began our conversation by pointing out that the Wal-Mart bill--which forces companies with more than 10,000 employees to spend at least 8% of their payroll on health care or pay the state the difference--was always intended to be just the first step. Four years ago, he made his intentions clear by introducing legislation to increase cigarette taxes and to use the tax code to compel employers to provide health insurance. Under his legislation the revenue from these taxes would be dumped into a new state fund that would then be used to expand Medicaid eligibility to families with incomes up to 300% of the poverty line (up from 200% now). But even in a legislature with large Democratic majorities, his bill stalled.

So Mr. Hubbard and others settled on a new approach--pushing through smaller, bite-sized pieces. The first piece was the Wal-Mart bill. It passed last year and was enacted last month, when the Legislature overrode Gov. Robert Ehrlich's veto. Two weeks ago Mr. Hubbard was at it again, this time introducing a new bill to mandate that companies with at least 1,000 employees spend 4.5% of their payroll on health care or pay the state the difference. Once this piece is in place, Mr. Hubbard told me, the next step will be to create a similar mandate--perhaps 2% or 3%--for companies with fewer than 1,000 employees. Each year, Mr. Hubbard hopes to expand the mandate to include ever smaller companies with the ultimate goal of "health coverage for all Marylanders."

Mr. Hubbard noted how effective splitting the difference can be in moving legislation toward a larger goal. "If you give up 80% of what you want to get 20%," he said, "after five years you will have nothing left to give up." Mr. Hubbard also noted a quirk in the system that made raising taxes and expanding the Medicaid rolls attractive. With the federal government paying half or more of every dollar spent on Medicaid, states were essentially leaving federal dollars on the table by not expanding the program.

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