NCPA - National Center for Policy Analysis


July 20, 2006

Federal District Judge J. Frederick Motz ruled yesterday that Maryland's Fair Share Health Care Fund Act is pre-empted by a federal law known by the acronym ERISA, whose purpose is to allow large companies to have uniform nationwide employee benefit plans, says the Wall Street Journal.

  • The law would have required companies with 10,000 or more employees to spend at least 8 percent of their payroll on health care or pay the state the difference. 
  • It became known as the 'Wal-Mart Tax' because the company was the only one in Maryland large enough to qualify.

The ruling showed that the idea of state-level "Fair Share" health-care is a legal loser, says the Journal.  But it is also a political bust.  Not one state has followed Maryland's lead, mainly because of the costly impact it can have on businesses:

  • Companies would have to meet a multitude of local requirements and be faced with much higher administrative costs.
  • Increased costs would leave less money left over to spend on actual health care.

Unfortunately, individuals and small businesses not protected by ERISA remain hostage to expensive state insurance regulations that have ballooned over the past 30 years, says the Journal.  Congress could do a lot to help by finally passing legislation to help decrease these costs, including:

  • Allowing smaller firms to band together across state lines to form Association Health Plans.
  • Allowing individuals in over-regulated states to buy cheaper coverage elsewhere.

Source: Editorial, "The 'Wal-Mart Tax' Goes Down," July 20, 2006

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