Walmart is a poor substitute for national health care

Maryland just passed a law requiring employers of a certain size to spend a certain percentage of the payroll on health care for their employees. The only Maryland employer big enough according to the new law that doesn't already spend this amount on employee health benefits is Walmart, who apparently lobbied hard against the bill. When the Maryland governor vetoed it the first time around, he was sitting next to a Walmart executive (the legislature overrode the veto).

Now, I hate Walmart as much as the next guy, but this bill only makes limited sense to me. True, it can be more cost-effective to put large groups of people -- like employees of a large company -- under one health insurance umbrella. As everyone pays a premium into a fund and only draws upon that fund when they have a legitimate claim, the health care cost for the person who needs it is less then if they had to pay for it out-of-pocket. This same logic makes health insurance more affordable if the pool of insured is large rather than individualized; not only does the bigger pool more broadly share the costs of health insurance, but it can mix up high-cost and low-cost people to diminish the burden on high-cost people (there's an element of fairness here, as low-cost people eventually turn into high-cost people as they age).

If it makes more economic sense to pool the insured into larger groups, what groups should they be in? In the U.S., it's employers. But this was a historical accident -- wage controls during World War Two caused companies to attract employees with better benefit packages in lieu of pay -- and it's not really clear to me that employers are the best groups around which to organize health insurers. The approach every other industrialized country takes, of course, is to put every person into one pool, a national health insurance plan, which is part of the reason why health care eats up a smaller percentage of GDP in countries with national health insurance then in the U.S.

So you can put all the mandates on Walmart that you want, but it still strikes me as an inadequate response to a real problem. Maybe the strategy is to make big employers cry uncle and push for national health insurance (the auto industry seems to be moving in that political direction). But it's a bit of a bank shot. I guess what worries me the most about it is the extent it shows Democrats giving up on national health insurance and accepting employer-based health insurance as a lame substitute.