Associates Joining Wal-Mart Health Insurance Program
By George Anderson
Even Wal-Mart’s critics have something good to say about the company’s announcement that it has enrolled 70,000 employees in its healthcare benefits programs for next year.
According to a report in the Arkansas Democrat-Gazette, about one-third of the new enrollees have signed up for the cheapest program offered by the company.
Wal-Mart Watch, an organization that opposes the retailer’s personnel policies, saw the announcement as a positive sign. Tracy Sefl, a spokesperson for Wal-Mart Watch, called
it “a step in the right direction” saying her group believes “in giving Wal-Mart credit when it does the right thing.”
“We firmly believe our efforts are having an impact in convincing Wal-Mart to embrace their role in solving America’s healthcare crisis,” she said. “We’re dragging them slowly,
slowly, slowly toward reform. It’s a 12-step program. The first step: admit they have a problem.”
Wal-Mart spokesperson Dan Fogleman, said the company “wants to be part of the national discussion about how to lower the high cost of health care.”
Moderator’s Comment: Does the retail industry need to develop a unified stance on addressing healthcare costs in the country? Should there be universal
access to healthcare? Who should be responsible for providing it? –
George Anderson – Moderator
Healthcare coverage is a critical issue that will only increase in importance. If the US wants a vigorous productive workforce, people need to be healthy. I can not offer a solution but, in my opinion, it is everyone’s responsibility. Without access to basic health care, individuals can not practice preventive procedures that are best for their body. Without taking responsibility for their daily activities, individuals must take responsibility for maintaining their body. By providing the means to access health care, government and business make it possible for health care professionals and individuals to determine how best to keep themselves healthy and productive. Everyone needs to step up and take responsibility. It is not possible to wait for someone else to take the responsibility.
What Wal-Mart is providing new employees is better than nothing and is a lot more than what most companies provide for new employees. Health care is a difficult decision for Americans. Actually, for what we now have access, paying $10,000 to $15,000 a year for health insurance is a good deal considering all the miricle lifesaving treatments available. If we move towards a universal system that gives poor people access to the best facilities, many Americans fear that they will have to share waiting rooms with the poor and get bumped out of queue. I think most of us are just going have to learn to deal with it, like when we go to the Department of Motor Vehicles and stand in line.
Health care reform is a national problem, not only for retailers. However, retailers employ a large swath of this country’s lowest-paid workers. Can we visualize how improved access to health care might be good business for the firms? Wal-Mart has at least grasped the public-relations advantage. Costco seems to use benefits as a tool to keep its workers positive-minded and motivated. Where is the smart economist who can relate health benefits to employee productivity and firm profitability?
On a related note, I am an advocate for establishing a national risk pool for health insurance that would eliminate most exclusions based on health history. This would help small firms and individuals obtain coverage more easily, and protect large firms and group plans from uncontrolled costs.
Because health care is not government-paid, any industry that can leave the USA is leaving. Most nations either have minimal health care and/or government-paid health care. So if the USA wants to become globally competitive, health care for many industries needs to be government paid, or those industries flee. Bricks and mortar retailers cannot flee the country. About 70% of manufacturing employees have health care coverage, compared to less than 50% of retailing employees. American hospitals have a “self-pay write-off” (uninsured patients who don’t pay) exceeding $20 billion annually. So there is something like universal health care coverage in the USA, but much of the cost of the uninsured is paid by the insured, their insurance companies, their employers, and everyone’s taxes. Wal-Mart profit before taxes was around $17 billion last year. Taxes were about $6 billion. Wal-Mart had 1.7 million employees. If you assume that 1 million needed health insurance and don’t currently have it and Wal-Mart paid $2,000 each, that would cost $2 billion or $1.3 billion after taxes, equal to 12% of profits. Union supermarkets already pay for full-timers’ health care coverage. If every retail firm in the USA had to pay for its employees health care coverage, the $20+ billion self-pay writeoff would decline significantly, and so would Medicaid costs. This would be a “level playing field” for everyone. If all retailers have the increased cost, then no one would be unfairly hurt.
BTW, the insurance industry defines the new Wal-Mart plan as “basic health insurance”. It has a $25,000 cap, which means that any significant health issue will have to be covered by Medicaid and/or “self-pay.”
Hooray! Wal-Mart is already showing its new corporate positioning. This is putting their money into action in the right areas. Wal-Mart is starting to treat their employees like their most important assets (which they are) instead of an expense. This is the first step of many which will make Wal-Mart a great organization. This is the type of standard which everyone in retail needs to follow. These types of benefits decrease turnover, increase employee satisfaction, and will help Wal-Mart’s bottom line, as their organization performs better (with happier, healthier employees). By having Wal-Mart do this, all of the other retailers will soon have to follow-suit, or risk losing their better employees to Wal-Mart. Everyone wins in this scenario.
Affordable health insurance is not just a retail industry issue, but crosses all industries. With only 60% of companies offering health insurance for their workers (down from 67% just five years ago), the lack of affordable healthcare is a public policy issue and doesn’t belong in corporate boardrooms.
Most employees (and employers) don’t remember that health insurance for workers was a direct result of the Wage and Price Guidelines set during the Nixon Administration. Companies were precluded from giving their employees raises, but paying for health insurance was a way to get around these rules and regulations. Over the last 30 years, employees have come to view company sponsored health insurance as an entitlement, not a benefit that employers could choose to provide, much like educational reimbursement, a profit sharing plan, or pet insurance.
Is it a company’s responsibility to provide health insurance to their workers? No. Is there a linkage between employees receiving “family friendly benefits” from their employer and their level of satisfaction and engagement? Yes. Should we care if Wal-Mart has finally decided to offer affordable health insurance to their workers to stem the tide of negative publicity they have received? No. The fact is we should be rewarding companies that are doing the right things for employees, no matter if they want to, or feel they have to.
Giving Wal-Mart “credit” for making these health insurance plans available stops short of recognizing them for once again doing what they do best — providing the most cost-effective solution to a need.
Americans have relied on the health care system to keep us healthy for too long. The attitude of “the doctor can fix anything” combined with the expectation that “the insurance will cover it” has made us conspicuous consumers of health services. Combine that with the expectation that “someone else will pay for it” (employer, government) and it is no wonder we are willing to swallow astronomical increases in health care costs.
The answer to our national health care need is a more pragmatic, value based approach from both providers and insurers. The combination of low premium/high deductible insurance with Health Savings Accounts is a good example. These plans reward participants for being discriminating (health care) consumers. And isn’t that what Wal-Mart is all about?
I’m with Ben. This is not required, although it will serve them in the long run by enabling them to take the best from the labor pool. Insurance is no one’s responsibility, but everyone’s concern. Any way to skin this cat is a bonus. At some point, the government will have to get involved, whether it is through tax incentive or subsidized healthcare, but the resistance (and, at this point, the lack of funds), is too strong.