Wal-Mart Making Benefits More Affordable
By George Anderson
Wal-Mart is introducing a new health care plan with lower premiums and higher deductibles to give its workers more options when it comes to looking after their and their families
medical needs.
The new plan with premiums as low as $11 a month will have a deductible of $1,000 for individuals. Premiums under the new plan will cost between 40 percent and 60 percent less
than under existing coverage offered by the company.
In addition to the new insurance option, Wal-Mart employees will now also be able to take part in the company’s health savings account called the Value Plan, which allows employees
with high deductible health plans (HDHP) to set aside funds on a tax-free basis to pay for medical expenses.
Wal-Mart takes this action after years of criticism over the health care benefits it extends to employees. Fewer than 50 percent of Wal-Mart’s employees are currently covered
under the company’s health plans.
Wal-Mart spokesperson, Dan Fogleman, told The New York Times that the company made the change after listening to the concerns of its associates.
Howard Berliner, a professor of health policy at the New School for Social Research, offered his assessment of the new Wal-Mart coverage. “Is it the greatest health care plan
in the world? Probably not, but my concern is getting people health insurance so they can get health care when they need it. In that sense, anything that speeds that goal is for
the better.”
Uwe E. Reinhardt, a health economist at Princeton University, said Wal-Mart’s new health benefit option removes “a big financial barrier between doctors and patients,” and even
those who find fault with the retailer will “have trouble attacking this plan.”
Tracy Sefl, a spokeswoman for Wal-Mart Watch, a coalition of groups critical of the retailer’s practices, said that health savings accounts may seem like a good idea on paper,
but the reality of the low wages earned by the company’s employees means “the majority of their work force will not be well positioned to contribute.”
Charles N. Kahn, president of the Federation of American Hospitals, expressed concern about a full-time employee earning less than $19,000 a year being able to handle the cost
of the new plan’s deductible payment.
Moderator’s Comment: What is the reality of the new Wal-Mart health care plan offerings? Most importantly, what will it mean for the company’s employees
and, secondarily, what will it mean for the company’s image? –
George Anderson – Moderator
The devil is in the details. The maximum coverage is $25,000 in the first year. What’s the max afterwards? When can people sign up: after 30 days on the job? 90 days? 180 days? a year? 2 years? Will the current medical plan be ended? Neither PR Newswire nor the Wal-Mart web site mentions the new medical plan, so I assume the details will be made public later today. It’s not clear whether this is a step forward for Wal-Mart’s employees or whether it’s an alternative method of continuing to shift Wal-Mart employee medical costs to taxpayers.
The best benefit of all Wal-Mart insurance goes to all of us. Wal-Mart’s insurance will be paying for catastrophic costs that otherwise end up being charged off resulting in higher health care/insurance costs for everyone else. However, many of the employees won’t be able to pay for services that detect early the high cost problems that result later. They will use the Wal-Mart insurance for catastrophic costs and will avoid using their deductible because they can’t afford it after the cost of living basics – even after they shop at Wal-Mart! In the end the rest of us will continue to pay a lot, though maybe not quite as much.
This is a step in the right direction for Wal-Mart employees, but still not a good reason to shop at Wal-Mart. Lets face it, based on the demographic trends alone socialized medicine is on the way. It’s the only way we’ll be able to take care of ourselves in the future because unless everyone pays someone pays and the cost will simply be too high for even the richest to willingly do that.
From any perspective, it’s a great first step, and hopefully Wal-Mart will approach this in the same manner it attacks merchandising procurement by driving costs out of the system.
Wal-Mart is doing their best to make health insurance more affordable. However, many of their low income workers just do not have the sophistication to understand the concept of health insurance. They can’t afford $1,000 deductible and probably do not even know what a deductible is. If you are going to lower premiums to $11 a month you might as well make them free. Just about the only way Wal-Mart is going to be able to increase the number of employees to sign up for heath insurance is to make it free and to do all the enrolling paperwork for them. Otherwise, when making a choice to spend $11 a month on beer and lotto versus health insurance with $1,000 deductible, we know what the choice will be. To many low income people, $1,000 might as well be $1 million. Still, Wal-Mart has one of the best health insurance plans I’ve seen for non-union retail workers.
I applaud Wal-Mart; the new plan is a big step in the right direction.
I do not agree with David. Being at the lower end of the economic scale does not mean the inability understand concepts that apply to insurance. Nor do I believe that Wal-Mart employees will be told this is available without any explanation. I think this population has more sophistication than we tend to recognize. Many of these individuals have been savvy enough to obtain medical assistance through all kinds of state and local community assistance — the price of that “assistance” is a lot of leg work and paper work.
I can see the $1,000 deductible as being a hurdle. But hopefully the insured will not face this bill all at one time or will be able to negotiate a payment plan.
All I can say is good for Wal-Mart… and don’t complain when the company attracts a greater share of the workforce!
I think we can be assured about several things. Firstly, this effort is NOT in response to the needs of their associates. If it were, it wouldn’t have taken so long and it wouldn’t be so little. It’s likely in response to their furthering efforts in a public relations campaign and to thwart unionization efforts which seem more and more a reality.
Secondly, I think that we can be assured that this will be at no additional cost to WM. There is little or nothing WM will do to increase their cost per associate or cost of doing business their way.
I also think that Mr. Lillian asks some very valid questions; the answers to which will allow for a much better evaluation of what this means and its implications.
Also, in response to some of the comments, I think the characterization of WM employees is disturbing and isn’t worthy of the normal level of discourse here or anywhere.
David is right about the paperwork: while this is certainly only “catastrophic” insurance as SidRaisch suggests, it is better than nothing. I think most Wal-Mart workers will understand that spending $132 a year on catastrophic health insurance is a good idea, but may find the paperwork and the questions in the application intimidating. A good program to sign up their employees will be the true test of whether this is a step in the right direction or a smokescreen.