City Council, in Veto Override, to Block Wal-mart

The City Council today is set to override a mayoral veto of a bill that would require large supermarkets and big-box stores that sell food in the five boroughs to pay part of their employees' medical expenses for the first time.

In his veto message, Mayor Bloomberg said the bill is pre-empted by a federal law that regulates health care plans provided by private businesses. Other opponents of the measure have said it was pushed by city grocery stores and labor leaders and is aimed at closing the market to non-union companies like Wal-Mart, the low-cost retail giant that has yet to open in New York.

Backers of the Health Care Security Act, including Mr. Bloomberg's Democratic challenger in the mayoral election, Fernando Ferrer, have said the bill will help thousands of working New Yorkers, who are faced with rising costs at every turn and are struggling to make ends meet. The measure, they argue, will also reduce the burden for taxpayers, who end up paying for Medicaid expenses and hospital visits for the uninsured.

Not all economists subscribe to that school of thought. A professor of public and health administration at New York University, Charles Brecher, said foisting requirements on part of one industry - in this case, large-scale grocers - is poor public policy.

Mr. Brecher, who is also a director of research at the nonpartisan Citizens Budget Commission, which has not taken a position on the bill, said the law would give smaller grocers a competitive edge and could drive businesses out of the city.

"It's going to raise the costs for these large-scale retailers," Mr. Brecher said. "It's several bucks an hour more that an employer is going to have to pay to hire.

"I think what the City Council is trying to show is that it is sympathetic to people who don't have health insurance, which is a fine objective, but the fact is that they are trying to deal with a problem in a way that doesn't make a lot of economic sense," he said.

Barring litigation from the Bloomberg administration, the law will go into effect in 90 days. It requires grocers who operate stores that are at least 10,000 square feet or have 35 or more employees to contribute to their employees' health benefits at a rate of between $2.50 and $3 an hour for every employee, the average rate among grocers in the city that already offer benefits. Grocers that don't comply will be subject to fines.

Council Member Christine Quinn, the lead sponsor of the bill, said yesterday it was designed both to help the uninsured and to protect responsible businesses that struggle to compete with stores that opt against providing benefits to their employees. She has estimated that it will benefit about 6,000 low-paid workers at stores like Gourmet Garage and Garden of Eden.

A number of city stores, including Gristedes and Pathmark, already provide the health benefits. Yesterday, a spokesman from Whole Foods, Fred Shank, said the company, which is non-union, already pays health insurance for the majority of its employees.

"By passing this legislation, we are protecting those good New York City employers, and we are protecting them from operators who want to enter our market and engage in a race to the bottom," Ms. Quinn said.

"Why should New Yorkers pay for a company's health insurance program?" she said. "We think it's important, regardless of one's position on Wal-Mart, that we as a legislature make sure that Family Health Plus and Child Health Plus are there for the people who need them ... somebody who works for a company that's making excessive profits should not be in that category."

She also said that while there are unions backing the measure, it has support from a number of entities, including New York University's Brennan Center for Justice, a nonprofit group called Jobs for Justice, and the American Cancer Society. The Community Affairs Manager for Wal-Mart's Northeast division, Philip Serghini, said, "Measures that target just a few companies we think are unfair, and we think that they clearly do nothing for the uninsured people in New York City."

Although he said he was reluctant to comment because Wal-Mart does not have any stores in the five boroughs, he said: "We do think it's really a way to prevent us from entering the New York market and to provide groceries."

Deciding whether to proceed with litigation could be tricky for Mr. Bloomberg. Mr. Ferrer and the other backers of the bill have long been painting the billionaire mayor as being more concerned with corporate interests than with struggling working-class families. They will undoubtedly seize on this, too, in the run-up to the November 8 election.

The mayor has said that while he is against the bill, he plans to propose other ways to expand access to health care.

The bill that he vetoed is a watered-down version of a proposal that would have applied to a number of other industries. It is being considered a pilot program, and if it stands up against an expected court challenge, council members are likely to expand it to other businesses.