Post by Moses on Apr 6, 2005 21:32:45 GMT -5
washingtonpost.com
Md. Passes Rules on Wal-Mart Insurance
Bill Obligates Firms On Health Spending
By John Wagner and Michael Barbaro
Washington Post Staff Writers
Wednesday, April 6, 2005; Page A01
Maryland lawmakers yesterday approved legislation that would effectively require Wal-Mart to boost spending on health care, a direct legislative thrust against a corporate giant that is already on the defensive on many fronts nationwide.
"We're looking for responsible businesses to ante up . . . and provide adequate health care," said Sen. Thomas M. Middleton (D-Charles), the Finance Committee chairman, as the Senate approved the measure with a majority wide enough to survive an anticipated veto. A similar bill has cleared the House of Delegates, and legislators expect to reconcile their differences easily.
Lawmakers said they did not set out to single out Wal-Mart when they drafted a bill requiring organizations with more than 10,000 employees to spend at least 8 percent of their payroll on health benefits -- or put the money directly into the state's health program for the poor.
But as debate raged in the Senate yesterday, it was clear that the giant retailer, which has 15,000 workers in Maryland, was the only company that would be affected.
"This is crossing a bridge," said Sen. E.J. Pipkin (Queen Anne's), who joined the Senate's other Republicans in voting against the bill. "Annapolis is telling private business in the private marketplace what to do."
Wal-Mart officials, likewise, condemned the General Assembly's effort as an unneeded intrusion. "We think that this sets a bad precedent by singling out one employer when it's a much bigger issue," said Nate Hurst, a government relations manager at Wal-Mart.
The retailer already is dealing with a spate of bad publicity, including increasingly intense criticism of its labor practices and a series of lawsuits. In the past month, the company agreed to pay $11 million to settle claims that one of its cleaning contractors hired illegal immigrants, and Vice Chairman Thomas M. Coughlin resigned after an internal probe questioned his use of as much as $500,000 in company funds.
The company is also battling a sex discrimination complaint filed by current and former female employees.
Along with tarnishing the folksy image fostered by founder Sam Walton, that sort of publicity could hurt the company's ability to add stores and could lead other states to pursue legislation similar to that advancing in Maryland, company officials said.
Despite its more than 5,000 stores and $285 billion in sales worldwide, Wal-Mart's future is closely tied to continued expansion. In the past year, the retailer has lost battles to build stores in Inglewood, Calif., Chicago and New York City. At the same time, dozens of local governments -- including Calvert, Prince William and Montgomery counties in the Washington region -- have passed zoning rules making it difficult for Wal-Mart to pursue its plans.
To battle back, the company has launched an unprecedented public relations campaign -- with advertisements in such publications as the New York Review of Books and face-to-face meetings with students, environmentalists and members of the Congressional Black Caucus -- aimed at tempering the company's skinflint reputation.
This week, the company hosted more than 50 print journalists from the United States, Japan and Britain at its Bentonville, Ark., headquarters.
Company officials said yesterday that they have let their critics, including labor unions, set an agenda that has focused legislative and regulatory attention on the company.
"We did a disservice to our employees and shareholders" by not speaking up, Wal-Mart chief executive H. Lee Scott Jr. said.
"Many of our competitors, let's face it, would like to continue to be rewarded for operating in ways that are less efficient," Scott said, adding that criticism of the company's wages and benefits from grocery workers' unions neglects to account for the fact that its low prices help working families.
Wal-Mart's image problems have had no measurable impact on consumers' willingness to shop at the chain, analysts said. Sales grew 11 percent last year and Wal-Mart estimates that 90 percent of Americans, or 270 million people, shopped at one of the company divisions in 2004.
Still, critics abound. At least two dozen Web sites catalogue the chain's missteps. One, the Wal-Mart Litigation Project, describes itself as a guide for lawyers preparing to sue the company. At another site, "Wal-Mart Fact Checker" rebuts company advertisements line by line.
And last week, 21 Democratic members of the U.S. House joined the United Food and Commercial Workers International Union in calling on ABC News to drop Wal-Mart as a sponsor of a "Good Morning America" series called "Only in America." ABC said it will stick with Wal-Mart.
"There is no perceived risk in attacking Wal-Mart anymore," said Eric Dezenhall, president of Dezenhall Resources in Washington and a veteran corporate crisis expert. "They have gone from being a business success story to being a cultural villain."
In Maryland, Gov. Robert L. Ehrlich Jr. (R) is expected to lend his support to the retailer and veto the measure, should the House and Senate reconcile small differences in the bill.
"I don't think this is a bill the governor is inclined to support," Ehrlich spokeswoman Shareese DeLeaver said yesterday, citing the governor's unabashed pro-business posture. Late last year, Wal-Mart hosted an Annapolis fundraiser for Ehrlich, which DeLeaver said is irrelevant to his thinking.
The margin of yesterday's Senate vote would be sufficient to override a veto. The House vote last month fell one vote short of a veto-proof majority, but several members were absent. Advocates predicted that they would have enough support to outflank the governor.
"This bill is going to become law with or without Bob Ehrlich," said Vincent DeMarco of Maryland Health Care for All, a coalition of labor, religious and community groups that pushed for passage of the bill.
DeMarco said the bill did not aim solely at Wal-Mart. Johns Hopkins University, Giant Food and defense contractor Northop Grumman Corp. have enough employees to fall under the bill's requirements. But all meet the 8 percent threshold for for-profit employers or the 6 percent mandated for nonprofits.
It was unclear yesterday exactly how far Wal-Mart is from the 8 percent mark.
Lawmakers said the company told them a year ago that it spent about 5 percent of its payroll on health benefits, which would mean an investment of roughly $8 million. Hurst, the company spokesman, said yesterday that the figure is 7 to 8 percent.
Hurst said about 80 percent of Wal-Mart workers in Maryland are eligible for benefits. Of those, he said, more than 52 percent have enrolled in health care options the company provides.
Middleton, the Senate Finance Committee chairman, said he hoped that, faced with the choice, Wal-Mart would spend the money on its own employees rather than contribute to the state Medicaid program.
"I think they would be crazy not to," he said. "This is an incentive to invest in their health care."
Barbaro reported from Rogers, Ark.