The “Wal-Mart” legislation on the docket in over 20 states is pushing some pro-business advocates into a Hobbesian choice – support Wal-Mart and other opponents of mandatory benefits legislation, thereby adding thousands to Medicaid rolls, or support the legislation and place a heavier financial burden on the world’s largest retailer.
Wal-Mart and several other large employers have thousands of employees covered under state Medicaid programs. The modestly paid employees qualify for the taxpayer-funded coverage due to their relatively low income. And, Wal-Mart’s health insurance plans are too expensive for these employees; different souces indicate different participation levels for employees, but none report participation above 46%. (The Wall Street Journal claims 46% of employees are enrolled in the company’s plans, other sources indicate 43% of the company’s 1.3 million workers are covered under their plans in 2005, a drop of five points from last year’s 47%.)
The average income for a Wal-Mart employee is less than $20,000 per year, making it difficult for them to afford even the least-expensive plans offered by the company. The company has developed a low-cost alternative plan (the “Value Plan”) that provides minimal coverage for an employee contributing $11 per month; while there are tight limits on benefits in the first year, these restrictions make sense; they will help mitigate adverse selection risks.
Improvements to the health benefits annonced by CEO Lee Scott include a reduction in the eligibility waiting period from two years to six months for full time workers; allowing children of part-time workers access to the plans; and reducing the waiting period for part time workers.
There are more than enough Wal-Mart bashers and advocates throwing stones over these and other issues. And the company is (somewhat unfairly) being made into a whipping-boy for a national problem. Remember, the number of employers offering health insurance has dropped by 15% over the past five years…
Simply put, labor expenses are a very significant part of Wal-Mart’s overall cost structure, and health benefit costs are hitting the company both directly (via employees on insurance) and indirectly (via the tax burden from uncompensated care, Medicare and Medicaid). This increases the company’s cost of doing business, and thereby their prices to consumers.
This is not a value statement, but reality.
What does this mean for you?
The US health care system is a burdeon on employers and our industrial competitiveness.
Feb
28
Yes, that’s right, our current health care systems IS a burden on our industrial competitiveness.
In order for the American economy to succeed we need a healthy and educated workerforce. But how do we accomplish those objectives?
We’re not even asking the question. We are playing in the mud and pushing these issues off on someone else, placing the blame for the failures of our healthcare and education systems on others, and are not even willing to frame the questions and sit down to try to work out the solutions.
The result is that we have achieved high levels of productivity in almost every phase of our economy, but these two areas are “black holes” for money and effort. While other countries are improving the distribution of health care and are increasing their educational capacity, we, at best, stay stagnant.
We just might be costing our grandchildren their version of the “American Dream,” yet politics continues to trump common sense…
Wal-Mart isn’t the lone cause of US health care problems. It’s the millions of small employers who don’t provide health care to their employees. Even if Wal-Mart supplied health care to all it’s 1.3 million employees, it would do nothing to eliminate the 46 million uninsured, or solve our health care crisis.
If Americans want a policy of employer mandated health care, then make ALL employers should be required to provide health insurance, not just Wal-Mart.
That might help, but that would create other problems by making US companies even less competitive around the world.
The only real solution is a policy of universal health care coverage combined with a universal enrollment policy
I don’t know who it was that said it, but the left wing of American politics are really missing the boat by working against Wal-Mart rather than with them. If the goal of the left is to get everyone into a government-sponsored health plan, corporate American in general, and Wal-Mart in particular, could be their greatest ally. And I have to agree. Take health coverage out of the coporate HR department and put it in a well-regulated, low-overhead bureaucracy. Follow the French system that allows people wanting more than just basic coverage (the healthy and the wealthy) to buy up through private, commercial plans. The only connection your employer would need to have would be to make sure the premiums got deducted from your pay, same as Social Security and unemployment.
Of course, that would mean somebody, somewhere has to stand on principle instead of politics.
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