The Maryland legislature passed a law Thursday that would require Wal-Mart Stores to increase spending on employee health insurance, a measure that is expected to be a model for other states.
Under the Maryland law, employers with 10,000 or more workers in the state must spend at least 8 percent of their payrolls on health insurance, or else pay the difference into a state Medicaid fund.
There are some possible loopholes in this law. The state has put a tax on payrolls--expect payroll growth to lag in coming years, whether from fewer new stores in the state or from lower raises. As it is written up here, the law doesn't seem to distinguish whose health insurance is paid for with the 8 percent--expect the company to contribute more at the margin for higher paid workers than for those most likely to take up Medicaid. The law only applies to firms with 10,000 or more workers in the state. With 53 stores and 17,000 workers in the state, perhaps Wal-Mart would sell some stores to get down below the 10,0000 threshold or try to reclassify some workers, like those who drive the trucks, as being employed by a store in a nearby state.
It will be interesting to see whether the law has its desired outcomes. Another approach the legislature might have taken would be tax any employer (regardless of size) for a portion of the Medicaid payments made on behalf of its employees or their dependents and used the proceeds to lower tax rates on all businesses. This approach of cost-sharing or experience-rating is more like what states do for their unemployment insurance programs.