Wal-Mart To Offer Lower-Cost Insurance, HSAs to Workers

Wal-Mart is introducing a new employee health plan, called Value Plan, that will have lower premiums and health savings accounts, the New York Times reports (Barbaro, New York Times, 10/24). The company has been "frequently criticized" for offering low wages and "inadequate" benefits, the Wall Street Journal reports. Fewer than half of its 1.2 million U.S. employees are enrolled in its health plan, and some workers have public health insurance. Wal-Mart currently offers 18 health plans to employees, with the lowest premium for a single individual costing $37 monthly (Wall Street Journal, 10/24).

Under the new plan, which has not yet been formally announced, monthly premiums would cost 40% to 60% less than those of current plans. On average, premiums would be lower than $25 for an individual, $37 for a single parent and $65 for a family. For employees in select areas, the premium will be as low as $11, according to Wal-Mart spokesperson Dan Fogleman (New York Times, 10/24). The plans would have a $1,000 deductible but would allow for three doctor visits and three generic prescriptions before the deductible begins (Wall Street Journal, 10/24).

In the first year, the plan would impose a $25,000 cap on coverage that will be removed in the program's second year. Out-of-pocket costs would range from about $300 for prescription drugs to $1,000 for hospital stays. Wal-Mart CEO H. Lee Scott will discuss the new option with company employees on Monday. Employees likely will be able to enroll in the new plan in 2006.

Fogleman said, "We are lowering the costs to make health insurance more affordable. It's fair to say we are listening, but more to our associates than anyone else." According to the Times, some health insurance specialists "generally praised the new plan," saying lower costs likely will attract more workers and reduce the number of uninsured employees.

Uwe Reinhardt, a health economist at Princeton University, said Wal-Mart has "removed a big financial barrier between doctors and patients" by allowing for three doctor visits before the deductible begins. He added that critics will "have trouble attacking this plan."

Howard Berliner, a professor of health policy at the New School for Social Research, said, "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."

However, some analysts warned that it is more beneficial to younger, healthier workers than to older workers who have more health problems. Chip Kahn, president of the Federation of American Hospitals, said the $1,000 deductible "is pretty significant" given that most Wal-Mart employees have annual salaries below $19,000.

Tracy Sefl, a spokesperson for Wal-Mart Watch, said the introduction of HSAs is impractical for Wal-Mart employees, adding, "The majority of their work force will not be well positioned to contribute." The Times reports that Wal-Mart's use of HSAs could "prompt other companies to re-evaluate" health accounts (New York Times, 10/24).