WalMart has introduced a health insurance program that is more affordable for its 1.2 million workers. In what appears to be at least partially in response to criticism from regulators, consumer affairs and labor advocates, and reports in the media, the plan provides coverage for as little as $11 a month (individual premium contribution) for a $1000 deductible program.
Fewer than half of Wal-mart’s workers are presently covered by their health insurance; the company’s major competitor, Costco, not only pays workers significantly higher wages and also succeeds in covering more than 80% of them.
According to the New York Times;
“Wal-Mart said that under the plan, monthly premiums would cost between 40 percent and 60 percent less than those for any existing Wal-Mart insurance policy, and that individuals could visit a doctor three times before paying a deductible, an arrangement aimed at encouraging workers to seek preventive care. In the past, workers have had to pay a deductible before their insurance kicked in.
Those who participate will pay a $1,000 deductible, the maximum under Wal-Mart’s insurance for 2005. Monthly premiums will be, on average, less than $25 for an individual, $37 for a single parent and $65 for a family. The $11 premium, for individuals, will be available in a handful of areas, Mr. Fogleman said.
But the plan is unlikely to cover a complicated illness or expensive hospital stay during the first year, when there is a $25,000 insurance cap. (The cap is lifted for the second year.) Out-of-pocket payments range from $300 for prescriptions to $1,000 for hospital stays.”
Critics note that older workers will not be as well-served under the plan than younger healthier workers.
I would note that Wal-Mart’s decision to provide cheaper, well-designed coverage deserves commendation. They will likely face criticism from the equity markets and some analysts, and others will complain, noting Wal-Mart’s long delay in providing affordable health care or question the plan design. Regardless, the company has put together a good program at an affordable price.
Kudos to Wal-Mart.
What does this mean for you?
For taxpayers in Florida and other states where large numbers of Wal-mart employees are covered under Medicaid, potential relief from the added tax burden. For other large employers with low-paid workers, more push to provide health care.
Oct
25
You are indeed an optimist Joe.
As you have described in detail, this is a very limited benefit. The premiums are probably between 5-15% of the employee’s gross income. My experience has been that lower income workers often chose to go without medical insurance if it is expense or of little benefit.
If employed Medicaid enrollees in Florida “opt out” of Medicaid and chose their employee sponsored health insurance they will be covered only by the employee sponsored plan. The Wal-Mart benefits will doubtedly convince few Medicaid enrollees to “opt out”.