The "Fair Share" Act, is Wrong in Principle and Wrong in Practice
January 2006
HB 2517, "Fair Share" Act, would require all companies in Washington state with 5,000 or more employees to provide a certain level of health care benefit or pay a new 9% payroll tax to the state treasury. The companion bill in the Senate is SB 6356.
Washington Policy Center's analysis finds the bill to be bad public policy in two primary areas: it is wrong in principle and wrong in practice.
HB 2517 is wrong in principle because it unfairly targets a narrow group of companies. Citizens should always be concerned when certain groups or businesses are singled out as the focus of government power.
The bill is unfair to workers who choose to access health coverage in other ways, such as through a spouse or individual-based coverage that puts workers in charge of their own health care. Mandating a one-size-fits-all, employer-based health care system deprives workers of choices in one of the most important areas of life.
HB 2517 is particularly unfair to temporary and part-time workers. If a temporary employee works just one day, he or she could be counted toward the employer's quota of 5,000 workers. Increasing the regulatory burden on jobs in Washington will encourage outsourcing to other states and countries.
The bill is unfair to business owners who should have a right to run their business free from micro-management by the state. If the largest companies can be hit with a costly and inflexible mandate, then no business in Washington is immune to similar treatment.
The "Fair Share" bill says, "It is not the intent of the legislature to influence the establishment, content, or administration of employee benefit plans." That is simply not true. The entire purpose of the bill is to direct employee benefit plans by allowing only two legal options: provide health benefits or pay the state. There can be no freedom of choice when the government controls all the options.
HB 2517 is also wrong in practice because it would not, as it claims, increase access to health coverage for Washington workers.
The bill states its purpose is "to further the state's interest in ensuring that its residents have access to appropriate health care services." By attempting to impose a mandatory, top-down solution, the bill actually makes it harder for Washingtonians to gain access to affordable health care.
The bill discourages new jobs. It creates a strong incentive for companies to maintain no more than 4,999 employees in Washington, and severely punishes successful companies that attempt to hire more workers.
For 18 years it has been the express policy of Washington state to sign up working people to the Basic Health Plan. It is illogical and contradictory to criticize employers when workers actually join the state plan for which they are legally eligible.
It is equally wrong to say that public health programs for working people are "corporate welfare." Corporate welfare is special economic benefits or market protections that policymakers give directly to favored companies. Many working people live in public housing, receive food assistance and use subsidized transportation. These important social programs are not "corporate welfare" to the companies that give these workers jobs, and neither is broad-based subsidized health care.
The Maryland legislature has already passed a bill similar to HB 2517 over Governor Ehrlich's veto. Union leaders say this is the first step in a nationwide strategy.
The Maryland bill applies to companies with 10,000 employees and imposes an 8% payroll tax. In describing the Maryland bill the Washington Post, hardly a bastion of free-market thinking, called it "a legislative mugging masquerading as an act of benevolent social engineering." The Post's editorial is aptly titled "Beating up on Wal-Mart."
Labor activists say they want the Maryland restrictions to apply to more companies and they have picked Washington as the next battleground. The Washington "Fair Share" bill is similar to the "Pay or Play" legislation that died in committee last year. That bill applied to companies with as few as fifty employees.
HB 2515's mandatory approach ignores the large artificial costs the state already imposes on the provision of health care coverage. The greatest barrier to health insurance is cost. State policies contribute significantly to the cost of health insurance
Following are five constructive ways the legislature can reduce artificial costs and increase access to affordable health care for all people in Washington:
The "Fair Share" approach does nothing to make health coverage more affordable, personal or portable. It is not only unfair, it moves our state in exactly the wrong direction.