BusinessTN

A pesky piece of anti-business legislation is again the camel’s nose poking under the tent flap on Tennessee’s Capitol Hill.

Pay or play,” a concept intended to force businesses to offer health insurance to employees or pay state government to help cover the cost, is again gathering steam on Tennessee’s Capitol Hill, the first time it has posed a real threat since the budget crisis of 2001. What’s different this time? It’s targeting a single business.

In Maryland last year, a bill targeting retail giant Wal-Mart passed that state’s legislature requiring large employers (those with more than 10,000 employees) that do not spend up to 8% of total payroll on health insurance costs to pay into a state controlled fund. Maryland’s governor vetoed the bill. Wal-Mart lobbyists are now busily courting votes to sustain the veto when session opens in January.

In Wisconsin, where a similar bill is still pending, the percentage is up to 10%. And in August, the New York City Council passed a new ordinance requiring retailers like Wal-Mart to contribute as much as $3 per hour worked to their employees’ health insurance.

It seems unfathomable that such anti-business legislation could get a hearing before a legislature as pro-business as Tennessee’s General Assembly. But in fact it almost certainly will in the coming legislative session. Why? In the aftermath of Gov. Phil Bredesen’s decision to slash the TennCare rolls, eliminating health insurance coverage for approximately 190,000 people in Tennessee, more and more legislators are talking openly about requiring benefit coverage from the largest employer in the state—Wal-Mart. Such a proposal is especially appealing to some sitting lawmakers as they look forward to the November 2006 elections.

Earlier this year, the state released a study showing that nearly 25% of Wal-Mart’s almost 40,000 employees in Tennessee were enrolled on TennCare. The study produced so much rancor and rhetoric on Capitol Hill that Wal-Mart lobbyists in Tennessee now fully expect Maryland-like legislation to be filed this year.

Nate Hurst, Wal-Mart’s Bentonville, Ark.-based government relations manager, says his company is currently at work educating lawmakers in Tennessee about what the company currently provides its employees.

"We’re taking people off public assistance,” Hurst tells Business Tennessee. “We certainly stand ready to join other big business and thoughtful partners from every sector to develop a sensible, workable solution to address Tennessee’s health care challenges.”

Hurst is battling similar anti-Wal-Mart legislation across the nation, the fruit of anti-Wal-Mart groups that have been sending it out to more liberal members of state legislatures. Currently, Democrats in the Tennessee House of Representatives—the ruling majority—are carefully considering as one potential item on their 2006 agenda legislation mirroring what passed in Maryland. In addition, Bredesen recently stated publicly that while he doesn’t foresee a push to require businesses to provide health insurance, he could foresee the use of incentives and subsidies to statutorily enhance partnerships between state government, businesses and insurance companies.

But before the pro-business forces across the state initiate an e-mail campaign targeting Democrats, consider that it could well be a Republican lawmaker that kick-starts the “pay or play” crusade against Wal-Mart in Tennessee. Interviewed this fall, Sen. Tim Burchett (R-Knoxville) tells Business Tennessee he does expect to file Maryland-like legislation in 2006, even though he describes the act of doing so as a “tilting at windmills, Don Quixote-ish” maneuver. Wal-Mart has very deep pockets, and they have a habit of getting involved in political races around the country. And unfortunately both parties in Tennessee are on the money I.V.,” Burchett says. “But enough is enough with the big money. If people want to really look at what’s going on in politics this is what they need to look at. It’s just the process and it’s unfortunate.”

Assuming a battle does materialize in 2006, not all support for Wal-Mart will be derivative of the behemoth’s ability to spread around campaign donations. In fact, if legislation requiring Wal-Mart to “pay or play” arrives on Capitol Hill this year, Wal-Mart can likely count on the support of what might at first appear to be a strange bedfellow, the National Federation of Independent Business (NFIB), home to many a mom-and-pop organization.

Tennessee NFIB director Rob Ikard explains his organization’s position is a philosophical one.

We believe health insurance is a benefit that companies offer in order to attract a better employee,” Ikard says. “It’s not an obligation. And if they can pass a law making it an obligation for some businesses then they can do the same for all businesses. We’re absolutely opposed to that.”

There may be room for compromise. In late October, Wal-Mart CEO H. Lee Scott publicly called on the U.S. Congress to raise the minimum wage, a move that would impact Wal-Mart significantly. Simultaneously here in Tennessee, the majority Democrats in the House of Representatives are also mulling as another top agenda item for the 2006 session the push for a Tennessee minimum wage that would exceed the national rate. Perhaps if Scott were willing to use his company’s significant muscle to aide the push for the establishment of a superior minimum wage in the state, he could persuade the powers-that-be in the Tennessee legislature to forego plans to target the company over its employee benefits program.

Either way, business in Tennessee takes a significant hit.