3/15/2006

The "Wal-Mart Bill" in Maryland

There is a very interesting article by Alan Reynolds about a bill that was passed in Maryland. It was dubbed the "Wal-Mart Bill" because it was really targeted at Wal-Mart. The bill requires Wal-Mart to pay 8% of its payroll expenses to health insurance. Yet, it does not require Wal-Mart to pay more in total compensation.

I agree with the author in his findings related to this bill. The intent of the bill was to get Wal-Mart to spend more on health care for its employees. The problem is that is was founded on weak arguments and it has adverse side effects. Ultimately, this will hurt the workers at Wal-Mart more than anyone else.

This bill mainly hurts those that are part-time workers like students, housewives, and seniors who also receive health insurance. These types of employees are typically covered by other insurance plans-husbands, fathers, or the government. Specifying that 8% of compensation has to be in health insurance just means that these workers will received less in pay. The insurance is not meaningful to them anyway.

There are other adverse side effects mentioned in the article if you want to reference it. This goes to show what happens when governments try to get involved in business. They try to regulate one area and then create problems in other areas.

5 comments:

Ella said...

I also saw something on the news about the proposed 8% health care tax in Maryland targeting Wal-Mart. There was also a clip of Steve Forbes stating the economic problems caused by this proposed legislation. It's the classic debate between government regulation and privatization. Forbes said that Wal-Mart should take a stand by moving a proposed distribution center across state lines. This would definitely send a message and might not be a bad move from an economic perspective.

Dr. Tufte said...

Reynolds was the first to point out that this bill is really requiring Wal-Mart to redirect some of its employees compensation away from them and towards the medical establishment. In some sense, it is another form of Medicaid.

FWIW: Alan Reynolds has a gift - whether you agree with him or not - of pointing out unusual implications of news events.

N.B. Kim Craft's sister-in-law, Briget Madrian is quoted in the article.

Alan Reynolds said...

I'm really liking that "Alan Reynolds has a gift." Some thought it was a curse.

Matthew said...

Dr. Tufte said that this bill will just be another form of Medicaid. This is true. And while I usually argue for more privitization and less regulation, I have to say that maybe this bill wouldn't be so bad. The way our government is set up, these workers will get healthcare no matter what – either from Wal-Mart or from the government. Personally, I'd rather have the workers pay, but our government isn't going to deny people from the E.R. With this bill, Wal-Mart's costs will go up and they will have to increase their prices to consumers. But the consumers would have to pay more in taxes the other way around. This seems to be a no-win situation.

Dr. Tufte said...

I think this view is OK. I don't have a problem with Medicaid, I just think we need to recognize Medicaid-like legislation, and call it such.