SURVEY SAYS: What if Your State Mandated Benefits?

January 12, 2006 ( - We've been reporting on various state initiatives, most recently one in Maryland that would require larger employers to spend a certain amount of their payroll on health care.

Granted, these so-called “Wal-Mart bills” have largely been targeted at – Wal-Mart (we errantly said that Wal-Mart was the only Maryland employer large enough to cross the threshold – it apparently is just the only one large enough who doesn’t already meet the threshold; see  “Maryland ‘Wal-Mart Bill’ Preempted by ERISA” ).  

Setting aside the “large” employer threshold (at some point, large could be redefined as smaller), this week we asked readers what they would do if a state that you operate in mandated health-care coverage/contribution.

Considering our readership focus, it is perhaps not too surprising that nearly three-fourths ( 73.33% ) of this week’s respondents said they would “shrug,” because they were already offering benefits in excess of what such mandates might require, thanks in many cases to the efforts of those respondents.   One reader noted that her firm had, “Nice boss, nice benefits, many of which I fought for.”  

Another noted, “We have very generous benefits and we’re self funded, so we’ll argue that it doesn’t apply to us anyway!”

One, who had “a great plan” went on to note that “Medical Coverage for full time employees should not be a benefit – it should be a given, especially for larger companies.”   Indeed, their own benefits level notwithstanding, a number of readers had strong feelings about the situation.   “I’m sure everyone agrees it’s about time for Wal-Mart to pay its share of reasonable health-care expenses. It’s not like they pay them so much in salary that their employees can afford to buy their own insurance. I think it’s a shame that the top executives of Wal-Mart live like kings, but their employees live like paupers.”   Another said, “In the end, I would shrug, because we already provide good benefits, but the costs are excessive and not helped in the least by these deadbeat employers.”

Of course, if such a mandate were to be imposed, one cannot be absolutely sure where the line would be drawn.   One reader prudently cautioned, “I think we would have to take it state by state.   We operate in Texas, Maryland, and Virginia and provide a ‘rich’ benefit plan already.   I guess I would ‘shrug,’ but I’d have to qualify my response, depending on what was mandated.”

“If Texas passed such a bill it would not affect us – we still pay 100% of our employees’ health, life, dental, and disability coverage (the employee must pay for dependant coverage),” noted one who acknowledged, “Yes, we are blessed and we know it.”  

The issue looms and has loomed in other venues, of course.   One respondent noted, “When it appeared that California would be initiating the mandated health coverage for employers (80% of cost for employees and dependents), which was subsequently narrowly defeated in a ballot initiative in November 2004, we were not concerned because we already pay about 93% of benefit costs.   However, the underlying concern was that the state would make us pay in to their plan, then ‘refund’ to us when they determined that our plan was ‘acceptable.’  

One reader explained that “The state of Maine has developed a ‘Dirigo plan’ to insure small employers and people in the state who have no health benefits.   It is being funded by a 2.5% fee on the annual health insurance cost for employers whose home office is in the state of Maine.   The rationale is that the people who have no health insurance will now gravitate to a plan rather than welfare. …As of 2006 we (employers in the state of Maine) are now subject to another ‘tax’ to pay for another welfare plan.”

Roughly 7 % said they would “start looking for another place to operate even if my company met the minimum requirements.”   One noted that “By choosing to operate in a particular state, a company makes a long-term investment in that state maintaining a reasonable legislative agenda.   States with legislatures dumb enough to legislate yet another societal problem onto the backs of its employer base deserve to lose that employer base. I’d be worried, what else would be next?”

In fact, among respondents in all categories, concern for where this kind of initiative could lead was a palpable concern.   One of those in the roughly 20% who chose “other” noted that they would “be agitated at the state once again meddling in affairs they should keep their noses out of. Nothing irks me more than the government adding more state mandates on an already-burdened system, without providing any recourse for employers who simply can’t afford it. Do you think some employees would rather be an employee without benefits or an employee without a job?”

Another reader said, “An employer’s first and foremost responsibility is to the ownership of the company.   After all, it is their capital at risk and, but for their investment in the company, there would be no jobs and no employees to complain about their ‘compensation package.’ For society to dictate to capitalists all of the things they must do to take care of their employees destroys the free market system and pushes us closer and closer to a Socialistic Society.”  

Another noted, “I have never been a fan of national health care, but I think we need to look for some creative solutions to this issue that go beyond the employer.   Employers cannot be viewed as the deep pockets to solve America’s woes.   We will spend over $50 million on health care this year in our company alone.”

One reader in the “other” category said that under such a mandate they would “jump for joy to finally have a choice for me and employees – as a very small business, we’re really having a hard time finding any decent coverage that we can afford. Apparently all the discounts that go to huge employers are offset by the rates charged to the small firms – ’cause we don’t have any good options!”

Another said they could “only wish our not very generous health plan for 110 employees was only 8% of payroll, but it is more like 20%.   But the real question is what does that accomplish?   It doesn’t solve the problem.   I wish we could all play on a level playing field, but we don’t globally or domestically; that’s the free enterprise system.”

But this week’s Editor’s Choice goes to the reader who said, “We would keep the plan the same, but shiver, not shrug.   This is the camel’s nose in the tent – big time.”

Thanks to everyone who participated in our survey!