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Squaring Off Over Health: Powerful Retail Industry Will Sue to Block Minimum Spending Levels for Health Insurance in Minnesota

Posted on: Friday, 17 February 2006, 06:00 CST

By Julie Forster, Pioneer Press, St. Paul, Minn.

Feb. 17--Don't look for Minnesota to adopt a Maryland-style law imposing minimum spending levels for health insurance this legislative session, which begins March 1.

Supporters here face opposition from a powerful retail industry along with a Republican-controlled state House unfriendly to government mandates.

"It will be tough in a short session," conceded Brad Lehto, lobbyist for the Minnesota AFL-CIO.

Labor groups in Minnesota are gearing up to push lawmakers to set a spending threshold on the state's largest companies for employee health care coverage. Even though the session hasn't started, one measure has already been filed, and other legislators in both chambers are working on their own versions.

The bills are modeled on legislation in Maryland passed into law over the governor's veto last month. It faces a legal challenge from a retail industry trade group whose directors include top executives from Richfield-based Best Buy Co. and Minneapolis-based Target Corp.

One proposal in Minnesota spearheaded by Rep. Joe Mullery, DFL-Minneapolis, would require employers with more than 10,000 employees in the state to spend at least 10 percent of their payroll on health care. Companies not meeting that threshold would pay a fee into a state-run health care fund.

Sen. Becky Lourey, chairwoman of the Senate Health and Family Security Committee and a DFL candidate for governor, intends to introduce her own version of the "fair share" bill and is working out the particulars.

"The idea is we want more people to have health care," said Bernie Hesse, a local union organizer for the United Food and Commercial Workers. "We're tired of companies that can afford it, shrugging it off."

Similar efforts have been launched in dozens of other states, and most take aim at retail giant Wal-Mart Stores Inc., which employs some 1.3 million people in the U.S. and ranks among the largest employers in many states.

In Maryland, for instance, Wal-Mart was the only employer affected by that state's health care mandate law. It requires employers with 10,000 workers in the state to spend at least 8 percent of payroll on health care or pay a fine into a health care fund.

Retailers say that though the Maryland law affects only one company, it is a threat to the way all large retailers provide health benefits to their employees.

In Minnesota, union leaders suspect Target and Wal-Mart will be affected if "fair share" were to be enacted -- employers they suspect have a high number of employees who are also in state-run health insurance programs.

They aren't the only private sector employers with more than 10,000 workers -- 3M, Northwest Airlines and Wells Fargo are among other companies that qualify. But the health care mandates generally affect employers with large part-time work forces, and that tends to be retailers.

Wal-Mart employs more than 18,000 employees in Minnesota. It says it offers health care coverage to all full- and part-time workers. But the giant retailer has been criticized for unaffordable health care options for its low-income workers.

At Target, which employs about 25,000 in Minnesota, a company spokeswoman said it changed health plans in 2004 but declined to elaborate. Hesse said he's heard from Target workers that part-time employees who work less than 20 hours per week were cut off from company health insurance.

Best Buy, with 8,000 employees in the state, does not offer health care coverage to part-time employees.

The company will oppose efforts to pass a law here. "The biggest reason we don't support this legislation is that it does nothing to address the rising cost of health care and accessibility," said Paula Prahl, Best Buy's vice president of public affairs.

If a bill passed in Minnesota, it would be a factor in whether Best Buy expands here, Prahl said. "Whenever you are looking to expand in a state, you look at all the reasons that make sense, and the reasons it doesn't make sense. Costs are always a part of that."

Supporters of health care mandates say they are trying to restore benefits that have come under fire in recent years.

"In the past, large employers were the most likely to provide health care coverage, and we have seen that slipping over the past several years," said Naomi Walker, director of the state legislative program for the AFL-CIO. "The bill is really designed to stop the erosion of health care coverage by large employers."

The Arlington, Va.-based Retail Industry Leaders Association -- of which Wal-Mart, Target and Best Buy are members -- is a leading force in opposing these state measures, which they say were meant to target certain businesses such as Wal-Mart and the retail industry in general.

The retail association represents 400 of the largest companies in the retail industry. Last week, it filed a federal lawsuit to overturn the Maryland law and one in Suffolk County, N.Y. The association argues that the fair-share health care laws are discriminatory and that states have no business regulating employee health benefits anyway because it's a federal matter.

A favorable ruling will send a signal to lawmakers across the country, said Paul Kelly, the industry group's chief lobbyist.

The trade association's board of directors voted unanimously to file the lawsuits. Best Buy CEO Brad Anderson is the group's chairman. Target Stores President Gregg Steinhafel is a vice chairman.

A ruling is not expected before spring, and then an appeal could drag it out. "In the interim," Kelly said, "we are working to defeat these bills as they are introduced in state capitols across the country."

Julie Forster can be reached at jforster@pioneerpress.com or 651-228-5189.

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Copyright (c) 2006, Pioneer Press, St. Paul, Minn.

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Source: Saint Paul Pioneer Press (St. Paul, Minn.)

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