“Fair-Share Health Care”: Big Labor’s Assault on Profitable Job Providers

Remember the old saying “If you can’t beat ‘em, join ‘em”? When it comes to the ongoing war between Wal-Mart and Big Labor, it has turned into “If you can’t organize ‘em, tax ‘em.”

On April 3, two Pennsylvania state representatives—Republican John Taylor and Democrat Kathy Manderino, both of Philadelphia—introduced House Bill 2495, the so-called “Pennsylvania Health Care Accessibility and Insurance Responsibility Act.” The legislation would force Pennsylvania employers with over 10,000 employees—Wal-Mart among them—to spend a minimum percentage of their payrolls on health care, set at 9% for for-profit companies and 7% for non-profits. Affected entities spending less than the government-mandated percentage would pay a tax equal to the difference between their actual health care spending and the minimum threshold. This new tax revenue would then be dedicated to the state’s taxpayer-provided health insurance programs.

House Bill 2495, backed heavily by the United Food and Commercial Workers Union and the Pennsylvania AFL-CIO, is modeled on a newly enacted law in Maryland which mandates that employers with over 10,000 employees spend at least 8% of their payrolls on health care or pay the state the difference. Conveniently, Wal-Mart was the only company affected by the new law. The Maryland law and the Pennsylvania proposal are part of a larger, nationwide effort by unions and like-minded state lawmakers to pass “Wal-Mart Laws”—also known as “fair-share health care” bills.

Observers of the campaign for “fair-share health care” note that its promoters have two primary goals. First, they want to drive up Wal-Mart’s costs (and therefore prices to consumers) to the same level of its unionized rivals, many of which are struggling to stay in business. At the same time, organized labor’s attack on Wal-Mart gives many big-government devotees an opportunity to advance one of their most dearly held aims—the incremental establishment of single-payer (socialized) health care in states across America. Pennsylvania policymakers need look no further than Maryland to see where this debate is headed.

Recently, the Wall Street Journal’s Brendan Miniter discussed Maryland’s “Wal-Mart Bill” with Delegate James Hubbard, who revealed that his effort was just the first step toward the ultimate goal of “health coverage for all Marylanders” paid for by taxpayers and consumers. In mid-February, Mr. Hubbard introduced a new bill that would require all Maryland companies with fewer than 10,000 employees to spend at least 4.5% of their payroll (3% for non-profits) on health care or pay the state the difference. Fortunately for Maryland’s workers, this “Son of Wal-Mart” bill was defeated in committee—but efforts to ensnare all Maryland businesses in the state’s health care net will undoubtedly continue.

While supporters of “Wal-Mart Laws” may be politically fluent, they are economically illiterate. Government-mandated spending levels on health care will only serve to further increase the cost of doing business in Pennsylvania. The consequences of this mandate include higher prices on goods and services for consumers, and losses or reductions in jobs and benefits for employees in affected businesses. The only beneficiaries of such a mandate would be unionized firms that, unable to compete with Wal-Mart, may be spared from bankruptcy for another year. But the short-term gain for the unions will eventually result in long-term pain for all Pennsylvanians.

In their attempt to make Wal-Mart “pay” for failing to provide what they consider to be appropriate employee health benefits, once again, policymakers are flailing at the branches rather than striking at the root of the problem of high health care costs. Instead, they must address the factors driving up such costs in Pennsylvania, such as the lack of medical liability reform, and remove barriers that limit small businesses’ access to private-sector health insurance alternatives. Mandating higher health care spending will only exacerbate the health care cost crisis.

Instead of assaulting profitable companies, Big Labor and its legislative allies ought to focus on improving Pennsylvania’s business climate through legal and health care reform. The last thing policymakers need to do is to give the state’s remaining job providers yet another reason to join the ranks of businesses leaving or avoiding our Commonwealth.

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Grant R. Gulibon is a Fellow with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, non-profit public policy research and educational institute located in Harrisburg, PA.