A federal judge ruled last week that the state of Maryland can’t use health insurance laws to punish Wal-Mart. The state law in question would have required nongovernmental employers with 10,000 or more workers to spend at least 8 percent of payroll on health care or pay the difference in taxes, according to The Associated Press.
AP noted that the law was “directly aimed” at Wal-Mart, “which has been under attack by critics who say that its inadequate health care plans are forcing some employees to rely on state-funded plans.” Wal-Mart disputes that contention, insisting that an estimated 73 percent of its U.S. employees in 2005, including part-time workers, were eligible for health insurance, which is higher than the 61 percent average for the retail industry.
Whatever one thinks of that particular issue, U.S. District Judge J. Frederick Motz correctly ruled that the Maryland law imposes, as he wrote, “legally cognizable injury upon Wal-Mart” because it would have to compensate employees in Maryland differently from how it does in other states. And he wrote that the federal Employee Retirement Income Security Act pre-empts “any and all state laws insofar as they may now or hereafter relate to any employee benefit plan.”
The state of Maryland said it would appeal Judge Motz’s ruling to the 4th U.S. Circuit Court of Appeals in Richmond, Va.
“It certainly was a logical and proper ruling,” said Johns Hopkins University economist Steve Hanke, who has studied the issue. But he said the passage of the law itself “certainly damaged Maryland’s business climate” because the law showed “there’s a risk the state government will come in and do something stupid” in other areas of business operation.