SACRAMENTO — A federal law intended to allow companies to create a uniform system of health benefits across the country may stand in the way of Gov. Arnold Schwarzenegger's still-sketchy universal health plan.
The 1974 law sought to help employers avoid a spate of conflicting state laws -- with different levels and types of worker benefits.
Last week a federal appeals court cited the law when it invalidated a Maryland law aimed at making Wal-Mart Stores Inc. spend more on healthcare. Since then, it has sparked questions about the governor's plan.
Wal-Mart and some other California businesses are among those skeptical of the plan. Any California health insurance law that contains a payroll tax could be challenged in federal court upon passage, they suggest.
The 1974 law's federal "preemption is a problem the governor has to look at," said Trudi Hughes, Wal-Mart's senior public affairs manager, based in Sacramento. "I would say that any sort of mandate is going to be suspect."
But the Schwarzenegger administration says no. It points out that the California plan would not be company-specific, nor would it mandate any specific kind of health benefit.
"We are on better ground," said John Ramey, a senior healthcare policy consultant for the administration.
The Schwarzenegger administration says its plan is different from Maryland's and should not be overruled by the 1974 federal law known as the Employee Retirement Income Security Act, or ERISA.
But Mark Johnson, a Grapevine, Texas-based attorney and a top national expert on ERISA, doesn't expect the Schwarzenegger payroll tax to survive a court challenge should it become law.
"This would be a direct attempt to manage a plan. I don't think it would pass muster," he said in a telephone interview.
The governor's plan would spend $12 billion annually in combined state, federal and private-sector funds to provide basic health coverage for 6.5 million uninsured Californians.
The proposal would require all individuals to have coverage, and it would provide subsidies for the poor.
All employers with more than 10 workers would be required to offer insurance or pay the equivalent of 4% of their payroll into a state fund. Hospitals and doctors would also be taxed as part of a so-called shared-responsibility scheme.
