NCPA - National Center for Policy Analysis

MARYLAND'S 0.05 PERCENT SOLUTION

May 5, 2005

It is estimated that as many as 700,000 Marylanders -- 12.7 percent of the state's population -- have no health insurance. To address this issue, lawmakers composed the "Wal-Mart bill" which would force the giant retailer to increase its spending on health care coverage for its Maryland employees, says Thomas A. Firey, senior fellow at The Maryland Public Policy Institute.

According to reports:

  • Some 80 percent of those employees are eligible for health benefits, but only about 52 percent of those eligible choose to enroll in company-sponsored insurance (for which they pay part of the premium).
  • Wal-Mart officials say the firm currently spends between 5 percent and 7 percent of its Maryland payroll on health coverage; the legislation would force the retailer to raise that to 8 percent or else pay the difference to the state.
  • Back-of-the envelope calculations suggest the Wal-Mart bill would extend coverage to 1,000 to 3,000 people, thereby lowering the state's un-insurance rate by, at best, about 0.05 percent.
  • To achieve that gain, Wal-Mart will have to up its health insurance spending by $2 million to $5 million a year; the retailer can free up the necessary money by cutting employee hours and skimping on raises, bonuses and other perks.

Despite the attention it has received, the Wal-Mart bill does little to expand health insurance coverage in Maryland, says Firey. Maryland legislators should instead address the state's questionable (and expensive) insurance mandates which result in high health insurance costs and reluctance by Maryland employers and individuals to purchase coverage.

Source: Thomas A. Firey, "Maryland's 0.05 percent solution," Maryland Public Policy Institute, April 29, 2005.

 

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