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Wal-Mart defends itself against proposed Maryland health tax

THE BALTIMORE SUN

A Senate hearing on a bill that would tax large employers that don't meet a threshold for health-benefits spending brought out a full array of business and labor groups, along with two likely Democratic rivals for governor who were united in favor of it.

But the spotlight was on Wal-Mart Stores Inc., as representatives of the mammoth retailer defended the company against what the chain's director of benefits called "many myths."

Lisa Woods, the director, said the retailer offers a variety of health plans to its workers and that its benefits package is better than those of many of its retailing competitors.

Critics, however, said a company with $9 billion in profit should be offering health plans that provide better coverage and more affordable premiums.

Woods, who traveled to Annapolis from Wal-Mart's headquarters in Bentonville, Ark., said about half of the company's employees elect to get health coverage and that the number isn't higher because many of its workers are teenagers covered by their families' policies or older people covered by Medicare or retiree plans.

The Senate Finance Committee hearing was on a bill to create "a fair-share health care fund."

Any employer with more than 10,000 workers in Maryland would have to spend at least 8 percent of its payroll on health benefits or pay the difference to a state fund. The money would be used to expand Medicaid coverage for low-income adults.

Woods said Wal-Mart spends 7 percent to 8 percent, so could be hit by the tax.

Proponents of the bill said Wal-Mart is the only company that would be affected and that the tax would raise about $12 million, a figure that the Wal-Mart witnesses didn't dispute.

'Shameful' numbers

Sen. Gloria G. Lawlah, a Prince George's County Democrat who is the bill's principal sponsor, said that "the numbers of uninsured are shameful" - an estimated 740,000 in Maryland and 45 million nationally - and that the costs of treating the uninsured get "shifted to employers who do provide health care."

Tax-supported public programs pay for some care, she said, and hospitals in Maryland add $400 million a year to their rates - which are paid by the insured - to care for those who can't pay.

Employers that can afford health coverage but don't offer it, or offer skimpy benefits or set costs at rates that workers can't afford, get "a free ride," Lawlah said.

For such employers, Baltimore Mayor Martin O'Malley testified, "this bill says, 'Step up, because the rest of us are no longer going to carry your load.'"

His likely rival for the Democratic nomination for governor next year, Montgomery County Executive Douglas M. Duncan, called the legislation "a common-sense solution to a critical problem in the state of Maryland."

Among the 19 witnesses in support of the bill were a number of labor groups, representatives of United Seniors of Maryland and the American Minority Contractors and Business Association, and one large employer, Giant Food. Wal-Mart has been an increasing competitive threat to food chains as it expands its grocery business.

Barry F. Scher, Giant's vice president of public affairs, said health coverage costs his unionized company about 23 percent of its payroll. "We're very proud of our level of benefits, and 8 percent is a good threshold," he said. Scher said Giant's benefits are negotiated in 47 labor contracts.

Bartlett Naylor, a consultant to Maryland Citizens' Health Initiative, a group supporting the law and seeking universal health coverage in the state, estimated that Giant "pumps $125 million" into health care in Maryland, while Wal-Mart "siphons off $30 million" in tax-supported benefits.

A lobbyist for Wal-Mart, Frank D. Boston III, told the committee that "it's bad policy to allow Giant Food and others to use the legislature to fight its competitive battles."

Wal-Mart worker

Irwin "Lenny" Post, a 74-year-old worker in the electronics department of Wal-Mart's Bowie store, said he is thankful for his Wal-Mart health coverage, for which he pays $240 a month. It picked up the cost of his wife's double mastectomy and hip replacement, and most of her expensive chemotherapy drugs, he said.

Joining Wal-Mart in opposition was Ronald W. Wineholt, vice president for government affairs of the Maryland Chamber of Commerce, who said, "No other state mandates this. This will definitely cost the state jobs."

A small-business owner joined the opposition. Larry Helminiak, of Carroll Insulation, a 65-employee firm in Eldersburg, said his company is small but meets the 8 percent standard. However, he said, "this bill would eventually work its way down," reaching smaller employers and setting higher benefit thresholds in the future.

Robert O. C. Worcester, president of Maryland Business for Responsive Government, called the bill "possibly the most anti-business legislation introduced in the 2005 session."

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