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Bullying Wal-Mart

Bad policies, not employers, are to blame for uninsured

Texas has become the latest state to jump on the anti-Wal-Mart bandwagon.

Lawmakers recently added an amendment to business tax legislation requiring employers with more than 100,000 employees (only Wal-Mart qualifies) to report the number of employees who are either themselves or their families receiving benefits under Medicaid or the Texas Children’s Health Insurance Program (CHIP).

It is a predictable first step: embarrass employers who do not provide health insurance to their employees.

Texas is following the lead of states like Maryland, which requires employers with more than 10,000 people to spend at least 8 percent of payroll on health care. Of course, lawmakers there already show interest in expanding the requirement to other smaller employers. The vaunted, recently-adopted Massachusetts plan features an employer penalty in that state of almost $300 per employee without health insurance. And a bill passed by a committee in the Colorado Senate (though since amended) would have required employers with 500 or more employees and their dependents on Medicaid to disclose how much they spend on health care.

In reality, lawmakers are desperate for relief from soaring Medicaid costs and increasing caseloads. Pinning the blame on an employer is easier than accepting responsibility for government’s role in increasing Medicaid rolls through the incremental expansion of the program and bad regulatory policies governing the private market. Texas employers should not be fooled into thinking this is only about Wal-Mart, or assume they will be immune to such requirements. In fact, many policymakers would gladly require employers to provide employees’ coverage if it would take the heat off lawmakers to address Medicaid, CHIP and other systemic health care problems – or at least create a distraction for the public.

For their part, the unions have constructed a Trojan horse on the issue, disguising their disdain for the non-unionized Wal-Mart in the guise of taxpayer protection. They have cultivated a message that Wal-Mart is freeloading off the government and requiring taxpayers to subsidize the health care of its workers. Of course, the real fly in the ointment is that Wal-Mart’s workforce is more efficient and productive than its competitors, particularly heavily unionized retailers like grocers.

Recent history demonstrates that unionized workforces receive premium benefits, at near-crippling expense to the company. According to a 2005 report, General Motors added $1,500 to the price of their vehicles to cover health insurance costs. Many have argued such costs make the automaker less competitive than foreign competitors. Indeed, singling out Wal-Mart might hurt the company in terms of profitability and efficiency as it competes with stores like Target, but it would almost assuredly hit customers in the pocketbook.

According to a poll from the Pew Research Center published in December 2005, 53 percent of people making less than $30,000 a year said they shopped at Wal-Mart regularly. A combined 72 percent of people, regardless of income, cited the low prices and selection as being the best thing about the retailer. Other studies have found that when the discount retailer moves into an area, its presence helps reduce the cost of living. Sticking it to Wal-Mart might make lawmakers feel like populists standing up for the little guy, but it makes for bad public policy.

If policymakers want to make health insurance more accessible and affordable, they should remove the one-sided tax benefits for employers who provide health insurance to their employees, or at least allow individuals the same tax advantages for providing their own coverage. Health Savings Accounts, for instance, have proven to be an important vehicle for expanding coverage, and a good start at giving individuals a financial incentive to take charge of their medical dollars. Most reports find that at least one-third of people choosing an HSA in the individual private market were previously uninsured, proving how good policies can make insurance more affordable and accessible.

Bad policies – not employers like Wal-Mart – are the reason taxpayers are burdened with expensive government health programs. Rather than doing more of the same and using public policy to tether employers to the health insurance of their employees, it’s time to look for a new direction. Give individuals the tools they need and the advantages of owning and controlling their health care.

Mary Katherine Stout is the director of the Center for Health Care Policy Studies at the Texas Public Policy Foundation, an Austin-based research institute.