Beset by threats of tailor-made state and local laws intended to force it to increase workers’ health care benefits, retail giant Wal-Mart is providing health coverage to more of its employees.
In 2008, Wal-Mart will provide employees with $4 co-payments for 2,400 generic drugs and will offer health insurance with monthly premiums as low as $5 to $8.
“The non-unionized Wal-Mart has taken a lot of heat on health care, including a custom-made bill in Maryland and copycat bills in other states mandating ‘pay or play’ rules for employee health coverage,” noted Diana Ernst, a health care policy fellow at the Pacific Research Institute in San Francisco. “The company’s new plan, however, has drawn praise from even its biggest critics.”
According to a mid-September news release by the company, “Associates will now have more than 50 ways of customizing their health care coverage options, which will allow them to select various deductibles, health care credits [which enable employees to visit doctors and purchase prescription drugs without paying anything out of pocket], and premiums, depending on their needs. This is a substantial increase from last year, when most associates had only nine choices.”
For premiums of less than $5 a month in some regions and no more than $8 per month nationwide, associates will have individual health coverage including “a $100 health care credit, more than 2,400 generic prescriptions for $4, a $2,000 deductible, and no lifetime maximum,” according to the news release. Last year, Wal-Mart associates could get fewer than 20 generic drugs at $3.
“This new plan comes at a time when many American employers are struggling to provide health care,” Ernst said.
Wal-Mart may even become a leader in consumer-friendly health care reform, says Ernst. The company is already helping its employees become more independent health care savers.
“Each year, Wal-Mart will contribute up to 20 percent of employee health plan deductibles, anywhere from $250 to $1,200, to their Health Savings Accounts,” Ernst explained. “Wal-Mart will also match whatever employees save in their HSAs–worth potentially 40 percent of their plan’s deductible.”
However, Devon Herrick, a senior fellow at the National Center for Policy Analysis in Dallas, said caving to criticism is not good for the company.
“Wal-Mart’s critics are not doing workers any favors by demanding richer employee health benefits,” Herrick said. “Employee health plans are merely a non-cash portion of workers’ compensation. If Wal-Mart is forced to boost health benefits, it will respond by reducing cash wages–or pass on higher costs to consumers.”
There is a widespread misconception that business bears the cost of health insurance, agrees Arnold Kling, an adjunct scholar at the Cato Institute in Washington, DC.
“Ultimately, business passes along much of the cost of health insurance to workers by holding down other forms of compensation,” Kling explained. “Some of the other cost is passed along to taxpayers because of the tax code.
“So, for Wal-Mart to increase coverage for workers is not such a big event,” Kling concluded, “It means that those workers ultimately will get more health care and less of either wages or other benefits.”