‘Fair Share Health Care’ May Pose Threat to Fiscal, Physical Health

Published March 1, 2006

In January, the Maryland General Assembly overrode Gov. Robert Ehrlich’s (R) veto of Senate Bill 790, the “Fair Share Health Care Fund Act.”

This first-in-the-nation law requires large employers to spend 8 percent of their payroll on workers’ health insurance, or else pay a $250,000 penalty to Maryland’s Medicaid program.

With only four Maryland businesses currently large enough to be covered by the bill, provisions of the law narrowed it sufficiently so Wal-Mart will be the only private employer to be affected.

Universal Health Care

The veto override isn’t the end of a legislative battle, but rather the beginning of a back-door attempt by the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) to secure universal health care nationwide.


In a recent column on his organization’s Web site, AFL-CIO President John Sweeney said, “Fair Share Health Care is a great start and if this administration and congressional leaders won’t give us a fair health plan that will cover all families in all 50 states, we’ll give them hell in all 50 states.”

At press time, 15 states have filed Fair Share Health Care legislation. But unlike Maryland’s approach, the other states have threatened to bring even small businesses into the mix by lowering employee thresholds and increasing payroll percentages required to be dedicated to health benefits.

A “pay or play” measure similar to the Maryland bill was rejected by the California state legislature in November 2004, and in the 2005 legislative session, six other similar bills died or were vetoed.

Poised for Debate

New Hampshire Representative J. Gail Barry (R-Manchester) is concerned about her state’s bill, which would require companies with at least 1,500 employees to spend at least 10.5 percent of their payroll on health insurance. Twenty-five businesses in the state meet the size requirement.

“If union advocates have their way, no one will be safe from the havoc wrought by the Fair Share Health Care Act,” commented Barry. “Consumers will likely bear the cost of this new government regulation with higher prices. Even worse, employers forced to comply might cut salaries or eliminate jobs.”

A similar bill in Rhode Island, House Bill 6917, mandates an employee threshold of 1,000 and would require 38 companies in that state to comply with the law. Massachusetts Senate Bill 695 may affect businesses with as few as 99 employees.

Affordability Not Addressed

Despite advocates’ claims that Fair Share Health Care will make health insurance more accessible, the law does not address ways to make health insurance more affordable.

According to the Council for Affordable Health Insurance’s report, Health Insurance Mandates in the States 2005, mandated benefits make purchasing health coverage cost-prohibitive by raising the basic cost of health insurance between 20 and 50 percent.

Nearly half of the states that have introduced Fair Share Health Care legislation rank among the top 10 in the nation in the number of mandated benefits.

Other Approaches Ignored

“This is not a serious effort to reform health care,” said Maryland Delegate Adelaide “Addie” Eckardt (R-Dorchester), who opposed the Fair Share Health Care legislation in her state. “The law ignores better approaches, such as expanding health savings accounts or reforming the small group insurance market, which would make coverage cheaper and more comprehensive.”

Christie Raniszewski Herrera ([email protected]) is director of the Health and Human Services Task Force at the American Legislative Exchange Council.

For more information …

The full text of the Council for Affordable Health Insurance’s report, Health Insurance Mandates in the States 2005, is available online at http://www.cahi.org/cahi_contents/resources/pdf/TrendsEndsDec2005.pdf.