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'Deadbeat boss' legislation takes roost in Michigan

Date Posted: February 12 2006

LANSING - The U.S. Congress has utterly unable or unwilling to provide Americans relief on health care costs. The cost of health care have been increasingly pushed to the states, where Medicaid costs have gone through the roof, and to individuals, who are paying higher percentages of their pay for prescriptions and co-pays.

Now the states are fighting back. In Maryland last month, the Democrat-controlled legislature overturned the Republican governor's veto, and adopted a law requiring companies employing more than 10,000 workers to spend at least 8 percent of their payroll on health care for employees - or pay any shortfall into a special state fund.

Here in Michigan, Sen. Ray Basham, a Democrat from the Downriver Detroit area, is pushing Senate Bill 734 (the so-called "Deadbeat Boss" bill) which would require corporations in Michigan with more than 10,000 workers to either provide affordable insurance to their employees or reimburse the state for nearly $100 million in annual Medicaid related expenses.

Wal-Mart is unnamed in the legislation, but the corporate giant has about 11,000 employees in Michigan. Basham requested a public hearing last month to coincide with public hearings taking place in the Washington state legislature on similar legislation.

"Throughout the country we are seeing states beginning to crack down on deadbeat companies who have been fleecing the taxpayers out of hundreds of millions of dollars in avoidable Medicaid costs," said Basham. "But here in the Michigan Senate, it's still business as usual."

Senate Bill 734, authored by Basham, requires large corporations to invest at least 8% of its payroll into health care coverage for its employees. Employers who refuse will be required to reimburse the state for the difference. The revenues would be put into a newly created "Fair Share Health Care Fund" to be used to reimburse taxpayers for Medicaid-related expenses.

"My legislation only seeks to protect Michigan taxpayers from a handful of highly profitable companies who want to shift their health-care-related costs onto an already struggling Medicaid system," said Basham. "The taxpayers of Michigan deserve a fair hearing for this matter."

Basham, using statistics provided by the Michigan Department of Human Services, said just one large unnamed Michigan employer, with 5,402 workers and 5,851 dependents currently enrolled on Medicaid, costs state taxpayers approximately $46 million annually. Overall, he said "deadbeat" companies that do not provide employees with health care are projected to cost Michigan taxpayers approximately $100 million annually.

Conservatives started foaming at the mouth at the anti-corporation trend started by the Maryland legislature. The Wall Street Journal decried that "What's really going on here is an attempt to pass the runaway burdens of the welfare state on to private American employers. As we're learning from Old Europe and General Motors, this is bad news for both business and workers in the long run."

The conservative Detroit News editorial page said the Democratic proposal "is clearly not a pro-growth strategy, but one that would drain profits from job-creating businesses to fund ill-conceived social crusades - like the Wal-Mart bill." The editorial continued, "Basham isn't doing Wal-Mart workers any good. But he is sending yet one more message that Michigan is hostile ground for job creators."

On the other side of the political spectrum is Metro Times columnist Jack Lessenberry, who wrote that "Wal-Mart mainly treats its 'associates' abysmally, pays them starvation wages and fails to provide the majority of its workers with any health insurance at all. What happens when they get really sick? Their only recourse is to fall back on the resources of the strained state Medicaid system."

He also addressed those who claim America will lose jobs because of this kind of legislation: "it became law (in Maryland) - and corporate America whined a little bit, then paid up. Maryland's still there, thank you."

Wal-Mart announced plans to open 600 stores in the U.S. in 2006 - and supporters of the bill say they doubt that Wal-Mart's growth will be hampered if the legislation catches on in other states.

Basham's bill doesn't have a chance of passage in Michigan - where the two legislative branches are Republican-controlled. But, said the New York Times, "many state legislatures have looked to Maryland as a test case, as they face fast-rising Medicaid costs, and Wal-Mart's critics say that too many of its employees have been forced to turn to Medicaid." The Times article added: "The bill's passage underscored the success of the union campaign to turn Wal-Mart into a symbol of what is wrong in the American health care system."