About the "Wal Mart" Tax...

...or, Maryland, We Have a Problem

Health insurance is expensive. It is expensive when government provides it. It is expensive when individuals pay for it on their own. It is expensive when businesses offer it to their employees.

Cost is a big reason why 45 million people in the U.S. go the entire year without health insurance, and millions more go without for shorter periods of time.

The number of people without health insurance has been growing dramatically in recent years–up 5.2 million in just three years. The increase in the number of people without health insurance is almost equal to the number of people who live in Maryland.

At the same time, governments have been paying for health coverage for more and more people. In the same three year period that 5.2 million more people went without health insurance, the state and federal government provided health insurance coverage to 7.9 million more people.

So how is it that Medicaid rolls are up by 6.1 million people, Medicare rolls are up 1.7 million, but more than 5 million more people don’t have health insurance?

Part of the answer has to do with population growth. There are more of us, so there would be some natural growth in the number who don’t have health insurance. But the biggest reason is the decline in work-based health insurance. Most people get their health insurance through work, but those numbers have been going down in recent years. How much?

If the share of U.S. residents who had work-based health insurance remained steady at the 2000 level, then in 2003 there would have been 9.4 million more people with work-based health insurance. (See the attached chart for an explanation).

Before we start bashing employers here, remember, health insurance is expensive. I asked my favorite insurance agent to give me some quotes for small group coverage. Assuming an average age of 45 and a pretty good health plan, the annual cost for individual coverage was $6,200; add a family and the annual cost exceeds $17,000.

Make it an HMO and increase copays and one can reduce the cost. On the other hand, add dental, vision or a myriad of other options and the costs can go way up. No matter what you do, it’s still darn expensive.

Some companies, like Giant Food (and Maryland Nonprofits), have made a commitment to providing affordable health insurance for their employees. Giant claimed that their health insurance costs were equal to about 22 percent of their payroll. Apparently, they were finding it increasingly difficult to compete in a marketplace with Wal Mart, which apparently does not have the same commitment to affordable health insurance for their employees.

And, the marketplace aside, we all pay when companies don’t offer health insurance. We pay when people end up in a government plan like Medicaid, and we pay when people end up getting care that they can’t pay for in the emergency room.

What we really need is a conversation about how we provide health care in Maryland and throughout the country. The first step is acknowledging that we have a problem.

Government doesn’t want to pay more and has been working to reduce their health costs. Companies are in business to make a profit, and health insurance costs are becoming a growing part of their costs. Caught in the crossfire are the 45 million people here who don’t have health coverage.

Maryland’s new threshold would be a baby step toward a solution, and a starting point for a larger conversation about how we all get access to health care (and how we pay for it). MBTPI

Addendum, May 20, 2005: A lot of people are coming to this blog entry from search engines. A brief, thorough, and unbiased description of Maryland's Fair Share Health Care Act is available from the Maryland Department of Legislative Services. An even shorter description is provided in the comments section of this blog from Glenn Schneider of the Maryland Citizens Health Initiative.

This bill was vetoed by Maryland Governor Robert L. Ehrlich Jr. on May 19, 2005. Any consideration of overriding the veto would not occur until the legislature reconvenes in January 2006.