03/13/2006 Eye on Health Care

Monday, March 13, 2006

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Rewarding Work

by Nathan Newman

Eye on Health Care: Demanding a Fair Share from Employers

45.8 million Americans, or 15.7 percent of the population, lacked health insurance in 2004-- a number that is rising as more employers drop coverage for their workers. However, many states are taking action to reverse these trends and move towards the goal of providing health care for all Americans. This issue of the Stateside Dispatch gives an update on some of those initiatives.

The symbol for this health care problem -- although hardly the only actor -- has been Wal-Mart, a company where half their employees, 600,000 people, are provided with no health insurance by their employer and even those with company health insurance receive a bare-bones policy with high deductibles and large copayment fees. And many of those uninsured Wal-Mart employees end up burdening public hospitals' uncompensated care funds or state Medicaid rolls.

Fair Share Accountability

The first legislative responses to this problem were laws passed in Maryland, New York City, and Suffolk County (a 1.5 million population county on Long Island, NY) to require some larger employees to provide health insurance for their workers or pay an assessment to their respective governments to cover the uninsured.

Maryland's law applies only to employers with 10,000 or more employees in the state, so its reach is only to a handful of the largest companies in the state such as Wal-Mart, but its national prominence helped spark a wide-ranging national debate on holding more employers accountable for providing health care to their employees.

While receiving less national publicity, the bills in New York City and Suffolk County applied to all medium and large grocery stores in their jurisdictions-- bills that were supported by much of the grocery industry as a way to maintain health standards in their industry. As John Catsimatidis, CEO of the major New York City grocery chain Gristedes Markets, explained, "If I have to compete with low-road cost cutters like Wal-Mart, it's going to be hard for me to continue providing my employees with the care they deserve."

Fair share bills are now being pushed forward in a states across the country, including Alaska, Connecticut, Kentucky, and dozens of other states. Wal-Mart and its conservative allies have stymied bills in states like Colorado and Washington, but activists in Colorado and Gov. Chris Gregoire in Washington have pledged to pass "fair share" bills next year, even as the fight continues in other states across the country. (See here for a complete list of fair share-style bills in various states.)

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Covering More Employers: Massachusetts

While the Maryland and similar laws already passed were good first steps, they still cover only a tiny portion of the uninsured, so focus is already turning to the next step of expanding health care accountability to a larger number of employers.

The most comprehensive model passed by any state house chamber has been the Promoting Access To Healthcare (PATH) bill that the Massachusetts House of Representatives overwhelmingly approved last November, a bill that would cover nearly all of the state's 500,000 uninsured residents. At the core of the proposal was a requirement that all businesses with 10 employees or more provide insurance to their employees or pay 5-7% of their payroll costs to the state to cover costs for the state's uninsured.

However, facing opposition by conservative state businesses and the top political leadership in the state's Senate chamber, it was announced on March 3rd that an alternative deal had been reached between the state's House and Senate leadership which would keep the broad-based assessment on businesses with ten or more employees but lower the cost to only $295 per employee. While grassroots leaders such as John McDonough, executive director of Massachusetts Health Care for All, declared the amount woefully inadequate to provide decent health care for the state's employees, he did write on the organization's blog (see here, here, and here) that advocates had won at least one fundamental victory, namely establishing the principle that businesses have a legal obligation to provide for health coverage of their employees, either directly or through taxes paid to the state government.

"This is not the end, it's the beginning," writes McDonough, and with the principle of employer responsiiblity established, raising the assessment on businesses in the future will be far easier than establishing it in the first place. Massachusetts figures show the state already spends $212 million to provide health care to employees at larger firms -- and the number is no doubt far larger when smaller firms are included -- so the adequacy of the health care assessment will immediately become a key policy debate if enacted, so the debate will still be on advocates' terrain.

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Covering More Employers: New York State

However, if the final details of the deal in Massachusetts do not live up to the scope of the original House bill last fall, then the ambitious bill introduced this week in the New York legislature, based on a proposal by the New York Working Families Party, could become the model for advocates nationwide.

The bill would require all companies in the state with one hundred employees or more to provide health care to their employees, or pay an assessment of $3 an hour per worker to cover the state's expenses in caring for uninsured workers. If enacted, this would be a serious expansion of coverage, extending health care to an estimated 450,000 working New Yorkers, and helping preserve coverage for 3.5 million more where large employers are increasingly threatening to drop coverage.

Significantly, the bill has broad support in the State Assembly and was introduced by a Republican in the State Senate, which is controlled by the GOP -- and the Senate Majority leader Joseph Bruno, while not endorsing the bill, has agreed that it's a serious problem when companies dump their health care responsibilities on the state while responsible businesses pay their fair share: "It's inequitable, it's unfair. That's what has prompted this legislation," [Bruno] said. "We're going to look at it."

While this New York bill will only reach employers with 100 plus employees -- and therefore cover a smaller percentage of employees than Massachusetts -- the $3 per hour of benefits for employees required under the bill would provide a stronger health care package for employees than even the original Massachusetts House bill passed last year and far better than what is being discussed in the current negotiations in that state. And if the New York bill is enacted, the next debate in the state will no doubt be how to extend those benefits to employees in smaller firms.

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Alternative Paths to Coverage

All of this debate on fair share accountability for firms is happening at the same time the Bush administration has been granting waivers to states to use Medicaid money to subsidize employers, especially smaller firms, who don't provide health care benefits for their employees. Symbolically, one of the most expansive of these programs is in Arkansas, home base of Wal-Mart. Just this past week, the state got final approval from the federal government to use federal funds to offer a cut-rate health care program to employers with less than 50 employees, with plans to expand it to larger employers over time.

The program will cost employers just $15 per month for employees whose income is less than 200% of the federal poverty guidelines, or $40,000 for a family of four. The cost will be $100 per month for those earning more. Federal funds will make up most of the difference in the cost, providing 82 cents of every dollar spent on the program for employees with children and 73 cents of every dollar for those without children.

The problem is that the health care provided is sub-standard, allowing a few doctors visits each year, no more than seven inpatient hospital days, and two drug prescriptions with no catastrophic coverage. Any serious illness will still leave families on the Arkansas health plan bankrupt. While far better than no coverage, the worry is that this is less a trend to extend coverage but instead a model for conservative politicians to cut back benefits for those already insured under Medicaid. Florida last fall received a waiver from traditional Medicaid, a waiver which allows the state to cut off health care benefits once an existing beneficiary receives a specified dollar amount of health care-- with even weaker standards for Floridians using Medicaid funds in conjunction with employer-paid health plans. Instead of providing a robust system of health care for the uninsured, many states such as Florida and Utah are on track to leaving many of those currently covered by Medicaid with worse benefits and at risk from financial ruin from any serious illness.

A more encouraging plan is the AllKids program enacted last fall in Illinois, which would extend affordable care to children in the state without health insurance. The health insurance will be comprehensive and free for families making up to $40,000 per year, while families making between $41,000 and $60,000 per year will pay just $40 per month per child, with higher-income families paying increased premiums on a sliding income scale. The program will be paid for through better cost containment through a state-run managed care approach to Medicaid instead of cutting benefits for recipients. The obvious limit to the program is that it does nothing for the uninsured parents or single adults in the state.

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A Fair Share from Employers for Comprehensive Health Care Reform

While Medicaid and SCHIP funds may be a useful component in subsidizing health care for the working poor, especially among smaller employers, states should combine this with a demand that employers contribute a large enough contribution to assure that all families receive a robust set of benefits that actually provide both preventive care and protection against catastrophic illness. Right now many conservative legislators are using the cover of "health care reform" to lower benefits for existing recipients of Medicaid, while extending only token benefits to the uninsured, all because they are unwilling to demand that employers step up and contribute their fair share to the solution.

The first step to comprehensive health care reform is the demand that employers provide real contributions to the health care insurance costs of their employees. This is important not just as fairness to uninsured workers but to the many companies providing such insurance who face unfair competition from unscrupulous employers who undercut responsible businesses not with better products but through poor treatment of their employees. Smaller firms may need some subsidies to provide that insurance to their employees -- although many small firms manage it today -- but every firm without health insurance should be required to make a greater contribution.

The "fair share" bills being debated in New York and Massachusetts are good models for beginning that path to comprehensive and affordable health care for all Americans.

More Resources

Eye on Health Care


Kaiser Family Foundation: Can States Stretch the Medicaid Dollar Without Passing the Buck? Lessons from Utah
UC-Berkeley Labor Center: Declining Job-Based Health Coverage for Working Families in California and the United States America Pays, Wal-Mart Saves: The Growing Cost of the Wal-Mart Health Care Crisis


AFL-CIO: Fair Share Health Care
Working Families Party: Fair Share for Health Care
Massachusetts Health Care for All: Affordable Care Today


Maryland Fair Share Bill
Massachusetts House Bill - Promoting Access To Healthcare (PATH)
New York Fair Share Bill (summary only)

Eye on the Right

Health Care Drives Wedge in the Right: Conservative lawmakers may have some ideas for how to cut Medicaid spending, but when it comes to making sure more Americans have health insurance, the right appears to be plum out of ideas. In New York, their leadership knows this, which is why they have so far acknowledged that the Fair Share bills are crafted to solve a very real problem. But don't expect the right's wingnut base to blithely accept this embrace of reality by their elected leadership. Following the acknowledgement of serious health care problems by NY Senate Majority Leader Joe Bruno, the New York Post declared that Bruno was out-of-line and that Wal-Mart was a good employer. Remember, there's nothing the right hates more than hard work and real solutions for working families.


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