Wal-Mart’s impact on health care costs, wages, employment and other indices will be the subject of a conference in Washington DC today. According to an article in Bloomberg, when the nation’s largest employer opens a store, it significantly impacts the local economy, with notable effects on Medicaid enrollment and expenses, the cost of staples (e.g. detergent, food), and wages. (Thanks to Peter Rousmaniere for the heads-up)
As one might expect, there is good and bad news to come. On the positive side, purchasers of goods from Wal-Mart get more for their money. On the negative side, wages drop both locally and in the areas that source the company’s goods; and governmental health care costs increase.
Here is an excerpt from the article.
” Another conference participant, Michael Hicks, an economist at the Air Force Institute of Technology at Wright-Patterson Air Force Base in Dayton, Ohio, studied Wal-Mart’s effect on government anti-poverty programs and found that Wal-Mart increased Medicaid costs an average of $898 per worker.
Medicaid Spending
Hicks found that a 1 percent increase in Wal-Mart’s market share in a state is accompanied by a 1.5 percent increase in Medicaid spending. Wal-Mart insures fewer than half its employees, many of whom cannot afford to pay for their own health insurance. Hicks found that government aid to needy families decreased by 3.3 percent with every 1 percent increase in Wal-Mart’s market share

Paul Krugman, one of the Op-Ed writers appearing in the New York Times, has an interesting take on a solution to the national health insurance crisis (free subscription required). Those who follow Krugman will not be surprised that he is in favor of a national health insurance program. But put aside the ideological constraints and consider the rationale. Here are a few of his points.
1. Life expectancy and infant mortality in the US is lower than in Canada, Britain, Germany, and many other countries.
2. Health care expenditures in the US are 40% higher than the next most expensive country and twice what they are in the UK.
3. Access to elective procedures is better for some in the US compared to some other countries, and worse for others (e.g. the uninsured).
What Krugman misses is the impact of health care on productivity and functionality. He talks about outcomes in terms of life expectancy, and the impact on health maintenance of deductibles and copays, but has yet to make the connection between those issues and what matters to business; revenue and profit per employee.
He also does not opine on his preferred form of national health insurance; single payer as in the UK or multiple insurers as in Switzerland; or funding; tax-based v. employer v. individual v. combination. In my view, that’s smart. Once we figure out that we need a form of mandatory health insurance, then we can argue over the funding of same. But first we need to agree that health insurance should be mandatory.
My bet is within 3-5 years that will indeed be the consensus of American business, a goal of most in the middle class, and growing in popularity among elected officials. The myth is we can’t afford health care coverage for all; the reality is we are paying for health care for the uninsured every day in the form of higher premiums, higher taxes, and reduced productivity and higher Medicaid and Medicare costs.
What does this mean for you?
The sooner we can reach consensus that some form of national health care coverage is the goal, the better for US business, providers, and the middle class.

Wal-Mart is back in the news, and it looks like it will be making headlines for some time to come. The fallout from the release of an internal Wal-Mart memo focusing on employee benefits expenses, health care costs and plans appears to be spreading, with potential problems for the firm pertaining to ADA issues. (thanks to a good friend in the insurance industry for the reference) In response, Wal-Mart has set up a “war room” (free subscription required) staffed by veterans of heated political campaigns to respond instantly to bad news and provide the company’s perspective on issues.
According to the LA Times, the internal memo authored by Susan Chambers, EVP Benefits will raise thorny issues for the company:
“The memo

Managed Care Matters is a year old. Starting with the first day’s posts on the use of oxycontin in workers comp and Coventry’s acquisition of First Health, the blog has covered topics ranging from international pharmaceutical pricing to the investment strategies of Ohio workers comp officials. We are up to just under 200 individuals signed up to receive posting notifications. Almost 5000 unique users visited last month, perusing the 320 entries posted to date. Over 120 comments have been posted to date, enriching the debate, educating me, and providing perspective sorely needed in today’s health care debate.
These are busy days for managed care bloggers. Proposals to cut Medicare and Medicaid by Congressional Republicans hit the nightly news shows, interrupted by ads for the $800 billion dollar Medicare prescription drug program passed by these same elected officials.
Mergers and acquisitions still happen, although the decline in frequency is balanced against the increase in the size of the deals.
Workers comp executives are indicted for illegal campaign contributions, bribery, and outright theft.
Managed care firms find themselves the subject of scathing audits alleging overbilling and lousy services.
Consumer directed health plans grow in popularity, while costs keep rising.
Health plan profits zoom, as medical inflation moderates and premiums climb.
Hurricanes affect the entire industry, forcing drivers in Alaska to help pay for wind damage in Alabama.
Huge companies, beneficiaries of state tax subsidies, are forced to offer health plans to low paid workers after news reports indicating 65,000 of their employees are covered by Medicaid.
I have enraged a few along the way (one executive at a workers comp managed care firm was heard to say he would rip my head off the next time he saw me) and look forward to continuing to perform that needed chore when appropriate. Hosting Managed Care Matters has made me more thoughtful, better read, and busier than ever.
Thanks for the insights, challenges, and news items, and please, keep it up.

More details are emerging about Wal-Mart’s internal debate on health care and benefits for employees (free subscription required). An internal memo from Wal-mart’s head of benefits notes that costs can be reduced by hiring younger workers, ensuring all workers get some physical exercise, and hiring more part time workers.
The memo was in response to the company’s soaring benefits expense, which has jumped 15% annually since 2002, driven in large part by a $1.4 billion increase in health care costs over that period. Wal-Mart, which employs 1.33 million people, provides insurance for less than 45% of employees, and 46% of their children are either uninsured or on Medicaid. Medicaid insures 5% of the company’s employees, or about 65,000 people (and probably more of their dependents).
Here are some interesting excerpts