Life Insurance

The proposed insurance expansion is part of a broader package that is intended to reduce health care costs and improve the quality of care. The plan also would outlaw smoking in workplaces, restaurants and bars across the state.

Some lawmakers have complained the payroll tax would encourage some employers to drop private insurance coverage if it is cheaper to pay the tax.

Other critics said the proposal is similar to a now-overturned Maryland law that would have forced Wal-Mart to spend more on employee health care. That law would have required non-governmental employers with 10,000 or more workers to spend at least 8 percent of payroll on health care or pay the difference in taxes.

But a federal judge ruled last year that Maryland's law was pre-empted by the federal 1974 Employee Retirement Income Security Act. A federal appellate court upheld that ruling in January.

The Retail Industry Leaders Association, which filed the Maryland lawsuit, contends the court ruling also applies to the Pennsylvania legislation.

"If we allow (the federal law) to be eroded by 'fair share' spending mandates or other state and local incursions, then we are headed down a dangerous track that would jeopardize employee-sponsored health care in this country," Todd Anderson, an attorney for the Arlington, Va.-based retail association, told the Senate panel.

Greco told the committee that lawyers inside and outside the administration have reviewed the Maryland decision and concluded that Rendell's proposal could withstand a legal challenge. The administration is expecting to receive a formal outside legal opinion soon, she said.

Sen. Jane Earll, R-Erie, expressed concern that the state would be unable to collect revenue from the tax if the measure was challenged in court, and leave the health care plan in limbo.

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