Blue Laws

First, it seems like they shouldn’t be called ‘Blue Laws’ – they should be called ‘Red Laws’ or something…

Second, I would imagine that they think that 8% is somewhere close to the average of what portion of one’s income one spends on health-related activities.

“Johnny, I don’t care that you’re 17 years old, and saving up for college. You need to have health care, young man. I don’t want to hear that you have health care from your parents. You need to listen to the State! The State knows what’s best for you.’

Or is Maryland offloading the costs for caring for their low income population onto a major employer of their low income population? Would you be happier if Maryland instituted an 8% payroll tax to cover their Medicaid expenses (actually it would be less than that since a payroll tax would be accross the board, raising revenue from high paying companies as well as Wal-Mart)? If Wal-Mart lowers pay wouldn’t that, in effect, be making people pay for their own healthcare?

In support of the previous post Wal-Mart (and other similar employers, if there are any) is offloading its payroll costs onto Maryland taxpayers and insurance buyers. By law (not to mention ethicially) hospitals can’t turn away sick people just because they can’t pay or are uninsured. The health care costs for people who have no health insurance nor any ability to pay will be borne by someone and it won’t just be the hospital. The tab will be picked up my Medicaid (in which case it’s the taxpayer) or by the hospital raising its rates (in which case it’s people who pay insurance premiums).

Perhaps 8% is about average now. There’s no reason to think that number will remain static. Based on historical numbers, we’d expect it to rise, rendering the legislation obsolete fairly quickly.

Also, since Wal-Mart doesn’t realistically have the option of abandoning the Baltimore and suburban Washington markets, in the way that GM could shut down one large plant, for instance, this really does constitute a tax of sorts on a captive company.

Boonton, “all the other businesses?” Even the ones that don’t pay for health care coverage?

Things we don’t know: 1) what Wal-Mart is already required to provide; 2) what, if anything, Wal-Mart’s not paying for health insurance (I doubt they pay directly for care) is costing the state.

I’ll gladly make a bet with anyone who thinks this is a good idea.

In five years:

1. Real wages for the affected employees will decline in the State of Maryland.

2. Job creation for the affected employees will be slower in that five year period than during the five year period leading up to it.

3. Walmart will be roundly criticized by the Baltimore press for paying low wages and “destroying” local jobs ….

nmg

Walmart’s cheapness with health care? What does Walmart, or any business, have to do with health care? Health care is an individual responsibility – and it always has been.

Do you know what’s an individual responsibility? Cable TV. If you can’t afford cable TV there is no ‘TV stamps’ or other gov’t program to give you TV. Healthcare, though, is mandated. Hospitals have to provide needed services and gov’t picks up a large portion of the cost through Medicare & other programs.

Corporations originally started providing fringe benefits to avoid paying out real money in wages. Now that the fringe benefits are costing more than they are worth, the corporations are dropping them. The truth is that the workers would have been better off had they demanded wages all along.

Really? Why? Were people just dumb in 1950 and now they are finally getting around to being rational?

Things we don’t know: 1) what Wal-Mart is already required to provide; 2) what, if anything, Wal-Mart’s not paying for health insurance (I doubt they pay directly for care) is costing the state.

To the degree that Wal-Mart already spends on providing health insurance then it’s not really affected by this law.

Boonton, “all the other businesses?” Even the ones that don’t pay for health care coverage?

Yes since they pay taxes as do their customers. Of course, Arnold didn’t say that the 8% law only applies to Wal-Mart so I think it would hit them as well.

The lack of a law mandating a minimum level of health-care benefits doesn’t represent a “subsidy” to Wal-Mart, contrary to Boonton’s suggestion that it does. Wal-Mart is simply paying its employees in a different way than those employers who choose to put a higher proportion of their employees’ compensation into fringe benefits (e.g., health insurance). It’s all a shell game, Boonton. Maryland can’t increase employee compensation (wages plus benefits) simply by mandating higher benefits. And if Maryland were to try to mandate higher total compensation the predictable result would be greater unemployment in Maryland.

No it means that Wal-Mart (and other businesses) let the state take care of their employees health care leaving Wal-Mart and the employees better off at the expense of everyone else. I don’t buy the ‘some employees’ argument either. In effect, poor employees are ‘covered’ by the state and that is a benefit to them even if they don’t get sick. After all, if I paid your car insurance premium for a year that would certainly be a benefit to you even if you never got into an accident!

Finally, where is it written that “healthcare is one of the few benefits that gov’t is mandated to step in an [sic] provide if it is needed”? That’s not in my copy of the Constitution. (The “general welfare” clause has nothing to do with it. You can look it up.)

Basically we have decided as a nation not to let people die on the streets due to inability to pay for healthcare. We have decided, though, that if you can’t pay for TV we aren’t going to help you. You are free to lobby against their principle & the law can certainly be changed.

If Wal-Mart lowers pay wouldn’t that, in effect, be making people pay for their own healthcare?

I think that the answer is “no” because it doesn’t carry all of the characteristics I would expect to see in someone buying something on their own. One critical characteristic is that individuals are not choosing to purchase more health care. The decision for that is being done by the Maryland legislature. And as such, individuals can’t take any part in their own cost/benefit analysis (e.g. do I go to the doctor for this cold and incur an expense or do I just tough it out) – they’re forced to purchase more healthcare than they might be willing to pay for. The problem with this is that it seperates the consumption decision from the payment. This leads to over consumption. Which is not what I would expect to happen when individuals are in control of their own spending.

Let us back up here for a moment. Wal-Mart already provides health insurance for most of their employees. So how is Wal Mart freeloading at the expense of others? A “freeloader” would be a business or individual that is providing no health insurance. This law is not addressing that. So the legislators in MD are lying about their intentions in passing this bill.

Regardless, I do not support this type of cherry picking interference by the government.

By the way MD also passed an increase to the state min wage today too.

Ok. But just because we’re not in an ideal libertarian free market does not justify us moving further away from it. I would rather that we abolish the programs that Walmart is exploiting than add additional programs that create a potential loophole for someone else.

True but is it moving further away or countering forces that already are moving it away in the opposite direction? Wal-Mart is well known not only for dumping its employees on state programs but also winning assorted tax breaks, zoning variances, subsidies and other goodies from local governments. Goodies not available to ‘normal employers’ who cannot match Wal-Mart’s promises of large job forces.

Eight percent rates are basically drawn from actural averaging in the State, but it coincides almost equally well acros the Country of Cost for Business of Wages/Health Care provison per Worker. The Law is simply trying to Strongarm Walmart into providing equivalent Health Care for Labor, as due other Business in MD.

By the way, Health Care provision is not uniform across the Walmart network. Each separate Store is offered whatever Health Care package for Workers that HQ decides, basically based upon ability to minimize Local area law. lgl

Boonton,

Re; Were people just dumb in 1950 and now they are finally getting around to being rational?

Yes.

We are beginning to see that giving up pay raises in lieu of health benefits and retirement plans that the corporation can just drop later may not have been such a great idea.

And we are beginning to see that giving the government our Social Security money may not have been such a great idea now that we know that the government can just change the benefit calculations at will.

What it says is that MD legislators are idiots. Show proof that less than 8% of payroll is skimpy. What if Wal Mart’s negotiated coverage is better than other employers but comes out to less than 8% of payroll?

It’s not. Considering the typical Wal-Mart job is under $20K per year it is implausible to believe they have discovered the magic HMO that is able to deliever for $1600 a year what your plan (or your employers) is probably spending $500 a month on.

We are beginning to see that giving up pay raises in lieu of health benefits and retirement plans that the corporation can just drop later may not have been such a great idea.

Odd isn’t it that health benefits are almost universally demanded by smart people who take smart jobs. I suppose we can dismiss the pay demands of university professors since their ranks have lots of head-in-the-clouds humanities professors but what about financial advisors, banks, hospitals, pharmaceutical companies, computer companies that require a highly intelligent labor force? Why do they insist on health benefits? Is it only because of the tax write off?

This is a nothing but a tax hike.

Basically it is. If you keep a large number of people out of the state’s poor program you get a tax deduction. If you put a lot of people on you pay the tax. Since the state has a program that funds healthcare for the poor how should it be funded if not by a tax?

I’m surprised, Arnold. I thought you favored making health insurance mandatory. By forcing WalMart employees to take part of their wage as health benefits isn’t MD taking a step in that direction?

Proof? Or are you making a baseless assumption just like the politicians in my home state? By your logic above it is still ridiculous. Let’s say WM spends 6% on a $20K salary, which is $1,200. Now they up it to 8% or $1,600 or a $400 difference. That magically makes the plan better?

Suppose WM is required to spend $400 more per employee on health plans. I see two extremes in how they can choose to spend it:

1. Ask their provider to simply raise their premiums by $400.

2. Get their provider to give them $400 of additional value.

Since WM has a reputation for cutting costs to the bone it is pretty surprising to imagine them (or any competitive business) simply giving their insurance provider a gift of more money for nothing of value. Even WM has to compete for labor so it makes no sense for them to increase spending on a benefit without them being able to show anything of value for it. Why not simply let the state have the $400 for their poor fund in that case?

So WM employees account for all the poor people milking the MD state government? Prove it. What % are WM employees?

There’s no need to. Obviously if the poor program covers poor people without insurance then increasing low wage workers covered by insurance decreases the burden on the program. (Also improving coverage also decreases the burden). This is the same logic by which charitable donations reduce taxes….charity reduces the state’s welfare expense. Has anyone ever tried to figure out how much a $1 tax decrease for charitible contributions decreases the state’s welfare burden????

This is simply certain businesses using the government to hurt their competitors. This has nothing to do with providing health care to the poor. Those programs are in place and are already paid for.

I don’t doubt that for a second. Lobbying is never pretty but what do you mean the programs are paid for? Who is paying for them? Taxpayers. If the number of people who need the welfare program goes down that saves taxpayer money.

Walmart will not reduce employee pay by exactly the amount of the additional benefits; it will reduce employee pay be less. The reason is that the forced additional health benefits will have less utility to those workers than the amount of pay (otherwise the workers would be purchasing the benefits voluntarily!). Thus Walmart will only be able to take back part of that effective pay increase.

Arguing otherwise would be to imply that government choice is better (higher utility) than private choice in this case.

Can we just end the tax linkage between employers and health insurance? I don’t get my car insurance from my employer.

One wonders why it’s more important for the state’s coffers to get the relatively few organizations with 10,000+ employees (how many are there besides WM? Does this apply to the government of MD as well?) than the many organizations with a mere 500+ employees?

If we’re worried about the impact on state coffers, should we be interested in knowing the fraction of employees without HI who work at large organizations vs. the fraction that work at small firms?

It has always seemed to me that WM’s competitiveness stems from combining the logistical and procurement advantages of a large cooperation with the employment conditions of the small local businesses that they are accused of driving out of business.
What’s good for the goose is good for the gander, yes?

I agree that having health insurance tied to your job is a big negative since it forces many people to stay in jobs they don’t want for fear of going uncovered. Nonetheless, insurance has a unique advantage when it is purchased in mass….the buyer can insist on universal coverage. Buying on the individual basis allows the insurance company to profile you and price you out of the market if you’re profile matches more of a sick person than a healthy person.

IMO, the best solution would be a universal voucher that people could use to purchase any insurance they want. The conditions on the voucher would be that any company accepting them would have to agree to limit variation in the premiums & accept anyone who applied (with reasonable limits). Beyond this universal coverage healthcare and insurance would become completely market orientated. People would be free to supplement the universal voucher with their own money, bargain with their employers for ‘premium health plans’ and so on.

Insurance only works when no one knows the future. Take 5 people and their health costs:

1 $200
2 $5000
3 $0
4 $50
5 $250

The average health cost here is $1,100. If no one knew anything at the beginning of the time period an insurance company would offer a policy for $1,100. The money raised would cover all the health costs for the group (IRL the company would also factor in profit as well as investment earnings on that money).

However, suppose person #3 knows he will not need insurance so he excludes himself from the pool. Now the average cost is $1375. Getting rid of that person who didn’t need health insurance raised costs for everyone else by $275.

Suppose the insurance company knew who the $5000 cost would be. They could offer insurance to the original group of 5 for $1,100 per person and they would accept since $1,100 would be each individuals expected health costs fo rthe year. Yet by excluding the $5000 person the insurance company raises $4400 ($1100 * 4) but only spends $500.

Yet if gov’t chooses to provide coverage for those who don’t have (or can’t afford) insurance everyone in the economy still has to chip in to pay off the $5000 bill. So the spending on health care is $4400 from the insurance premiums plus $5000 for the taxpayer paid benefit.

On the other hand, if you mandated universal coverage you could spend just $5500 on supplying the same healthcare. These numbers are exagerrated but not by that much. For many people their financial planners plan on having them give up their assets so they can slip onto Medicaid rolls…especially at the end of life.