February 16, 2006

Health care bill targets Wal-Mart: Lawmakers want to recoup Medicaid spent on workers
Source: Lexington Herald-Leader

By John Stamper

FRANKFORT, Feb. 16, 2006 (Knight Ridder/Tribune Business News delivered by Newstex) --

Lawmakers chastised retailing giant Wal-Mart (NYSE:WMT) yesterday, threatening to pass legislation that would force the world's largest company to take better care of its 32,249 Kentucky employees.

The measure would require companies with more than 25,000 employees to spend at least 10 percent of their payroll on employee health insurance. It was approved by the House Banking and Insurance Committee 15-4, with three members voting "pass."

However, several legislators who voted for the bill said they still have serious concerns and might vote differently when the measure comes before the full House.

"It has a rough, bumpy road ahead, to say the least," said Democratic Rep. J.R. Gray of Benton, a co-sponsor.

Wal-Mart has faced intense criticism during the past year for its health insurance policies, which cause many of its employees and their families to rely on state-sponsored health care plans or go uninsured.

Called the Fair Share Health Care Act, the proposal appears to affect only Wal-Mart. UPS, the state's second-largest private employer, said it had 21,116 employees last year.

Federal, state and local governments are exempted from the act.

Businesses with 25,000 or more workers that fail to spend 10 percent of their payroll on health insurance would be required to pay a sum equal to that amount to the state. That money would be used to support the Medicaid program.

Companies that fail to make the required payment would face a $250,000 fine.

Similar versions of the so-called Wal-Mart bill are under consideration in 33 states this year, according to Laurie Smalling, a Wal-Mart regional manager of state government relations who testified yesterday.

Calling the provision "an unfair mandate," Smalling said the bill would "cost jobs and slow economic growth."

She said the company's insurance offerings compare favorably with other large retailers.

The company has 38 Wal-Mart stores, two distribution centers and seven Sam's Club stores in the state, which pay an average wage of $9.94 an hour, Smalling said.

She declined to say what percentage of the company's Kentucky payroll is spent on health insurance. She also couldn't say how many of the company's Kentucky workers rely on Medicaid.

An internal company memo leaked to the media late last year said that 5 percent of Wal-Mart's workers nationwide are on Medicaid, compared with an average of 4 percent for other national employers. About 27 percent of its workers' children are on Medicaid, compared with 22 percent nationally.

In all, 46 percent of Wal-Mart workers' children are either on Medicaid or are uninsured, according to the memo.

"We have large entities that are riding on the backs of taxpayers," said Rep. Melvin Henley, R-Murray, a co-sponsor of House Bill 493. "We need some special regulations to control the mammoths among us."

Those who opposed the bill, and some who voted to pass the measure, said it is unfair to target only Wal-Mart when businesses of all sizes are struggling to provide adequate health insurance.

"I just have a reluctance to attack one business like this," said Rep. Sheldon Baugh, R-Russellville, who voted "pass."

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