‘Fair share’ bills to make health care reform hurt more‘Fair share’ bills to make health care reform hurt more

This article does not necessarily reflect the opinions of the editors and management of Nation’s Restaurant News.


Just when you thought it was over, a new batch of health care reform legislation is making the rounds at the state level that is potentially a greater threat to industry business models than Obamacare.

You may remember that in January of 2006, the Maryland legislature overrode Gov. Robert Ehrlich’s veto and passed what has come to be known as the Fair Share or Wal-Mart Bill. Cynically created as a largely political tool to advance union interests against Wal-Mart Stores Inc. and other large employers, the legislation forced companies — those with 10,000 employees or more — to spend up to 8 percent of their payroll providing health insurance or pay the difference as a tax or fee to the state. The law was applauded by labor groups but, not surprisingly, chided by serious health care policy experts and ultimately deemed unconstitutional due to pre-emption by the Employee Retirement Income Security Act, or ERISA.

One might assume that three years after the passage of President Barack Obama’s signature health care law, the Patient Protection and Affordable Care Act, big labor’s incentive to push politically motivated health care bills at the state level would have dwindled.

That, however, is not the case. 

Since the passage of the PPACA, a great deal of media attention — and, increasingly, political attention — has focused on the 30-hour full-time threshold of the law that requires employers to provide coverage for workers. Not surprisingly, two new “fair share” bills have been introduced in California and Connecticut, with the stated aim of addressing the perception that the PPACA incentivizes employers to reduce employee hours.

The new bills would force qualifying employers with employees on state Medicaid programs to pay for their benefits through a tax or fee, mitigating the cost shift to the states and, theoretically, eliminating the incentive to reduce hours. The California bill applies to employers with at least 500 workers in the state, while the Connecticut bill applies to employers with at least 100 workers in the state and 250 workers overall.

Of particular concern is that the widespread fear of the PPACA’s future unfunded Medicaid expansions will mean that state legislators will be listening very carefully. The PPACA does not require employers to provide health care to part-time employees, and at the same time expands Medicaid programs to all Americans under the age of 65 whose family income is at or below 133 percent of federal poverty guidelines.

This Medicaid expansion is 100-percent paid by the federal government for the first three years but phases down to 90 percent by 2020, with states picking up the remainder of the cost. States are understandably concerned about their ability to pay the tab, making these new bills more attractive and relevant.

The first iteration of “fair share” bills in the mid-2000s was all about Wal-Mart. This time they are not alone, with leading restaurants and other service-industry employers as well as some in the manufacturing sector facing public scrutiny for the real or imagined ways they will implement Obamacare internally — such as reconfiguring their full-time/part-time mix.

While the previous effort was fought by and for unions, the re-emerging legislative trend also has the coordinated backing of a diverse cross-section of activist groups advocating for the welfare of women, minorities and immigrants, as well as members of the clergy. Cloaked under the guise of making the PPACA more effective, supporters and their allies in state legislatures are creating a narrative about employers that allegedly offer such poor wage and benefit packages that their employees are driven onto Medicaid rolls. In their minds this effort, driven in concert with their other goals like paid sick leave and significant increases in the minimum wage, will become the legislative platform for the future. 

While the majority of state legislatures have wrapped up their 2013 sessions, expect other Democratic strongholds to follow California and Connecticut. With virtually full-time legislatures, Illinois and New York remain potential threats for activity this year. But more troubling will be the 2014 legislative sessions, when unions, activists and their allies in elected office will have a hard time resisting the urge to push new “fair share” bills in Colorado, Delaware, Maryland, Minnesota, Oregon, Vermont, Washington and West Virginia. States with divided control of state government — Kentucky, Maine, Montana, Nevada and New Mexico — also may have threatening legislation in this area.

The plain fact that Democrats and unions got what they wanted three years ago with the passage of the PPACA should not divert the attention of restaurant operators from new threats to their bottom lines coming out of their state capitals. Employers would be wise to begin an internal discussion about the effect new “fair share” laws may have on their business planning for health care implementation, their bottom lines and, last but certainly not least, their reputations.

Joe Kefauver is managing partner of Parquet Public Affairs, a national issue management, communications, government relations and reputation assurance firm that specializes in service sector industries. For more information, go to www.ParquetPA.com.