Health Coverage Mandates Raise New Issue in Debate

There is undeniable irony here: A call for government help with health coverage — a veritable campaign for “socialized medicine,” some might say — coming from a champion of capitalism, Wal-Mart.

“At the end of the day, this is not about me,” Wal-Mart CEO H. Lee Scott told a meeting of the National Governors Association last week. “And it is not about you. It is about all of us and what we can do to keep this country great.”

Scott’s primary goal in speaking to the governors was lobbying against a growing tide of legislation aimed at forcing large employers — specifically Wal-Mart — to provide health care coverage for workers. At least 30 states have introduced health spending mandate bills or have such legislation in the works.

In California, Sen. Carole Migden (D-San Francisco) two weeks ago introduced legislation (SB 1414) she calls the Fair Share Act. Migden’s bill requires that companies with more than 10,000 employees in California spend at least 8% of their payrolls on health care. If they devote less to insuring employees, they must pay the difference to the state’s Medicaid fund. The bill would apply to nearly 70 companies in California, including Sears, Target, Macy’s and Wal-Mart.

Nationwide Legislative Efforts

In other states, bills clearly are aimed at Wal-Mart alone. In Maryland, where a spending mandate was enacted despite the governor’s veto, only one company — Wal-Mart — has enough employees to qualify. Migden’s bill and similar legislation in other states are modeled on the Maryland bill.

Wal-Mart, the world’s largest retailer with more than $300 billion in revenue last year — more than the entire budget of many countries — promises to do better by its workers in the short run, but the company also said, ultimately, health care should be somebody else’s responsibility.

“The soaring cost of health care in America cannot be sustained over the long term by any business that offers health benefits to its employees,” Scott said. “And every day we do not work together to solve this challenge is a day that our country becomes less competitive in the global industry.”

Tim Kaine, Democratic governor of Virginia, said he was “intrigued by discussion about the weaknesses of the employer-based health care model in this country and sort of wondered what his (Scott’s) thoughts about the alternative would be.”

Neither Scott nor any of the governors in attendance publicly used the words “socialized medicine” or “universal health care” or “single payer plan,” but they come to mind, uttered or not.

Ken Jacobs, deputy chairman of the University of California-Berkeley Center for Labor Research and Education, isn’t quite ready to call this a bellwether moment in health care history, but he does say it’s significant.

“What these health care spending mandate bills have done — you can collectively call them the Wal-Mart bills — is forced government to look at the issue directly,” Jacobs said. “That alone is significant. Remember 14 years ago when Clinton’s call for a national health plan was pretty much erased from the map? Governments at many levels, not just the national level, have been ignoring the issue ever since. These spending mandate bills force them to at least look at it.”

What they see are state legislators all over the country trying to bolster ailing federal assistance programs — Medicaid (Medi-Cal in California), mostly — by requiring employers to provide health insurance for their workers who earn so little they not only can’t afford their own health coverage, they’re poor enough to qualify for government subsidized health care.

Legislation Supporters Frame Debate Around Medicaid

“Government and entitlement programs are a safety net,” Migden says. “They are not supposed to be a place employees from a major corporation are compelled to get their health care because their employer shirks that responsibility.” Wake-upWal-Mart.com — a national organization funded by labor unions and Democracy for America, a political action committee founded by presidential candidate and former governor of Vermont Howard Dean — has spearheaded the national drive to get Wal-Mart to expand its health coverage for workers.

“Wal-Mart’s dirty little secret is to force taxpayers to pay nearly $1.4 billion in their health care costs, while Wal-Mart pockets $11 billion in profits,” WakeupWalmart.com spokesman Paul Blank said. “Wal-Mart will cost American taxpayers more than $9 billion over the next five years in health care costs alone,” Blank said.

The company disputes Wake-upWal-Mart.com’s contentions, saying the numbers were reached with faulty methodology. Wal-Mart says the number of employees covered by its health plans increased last year to 46%, but still falls below the national average of 60%. The company said almost one-third of its workers get health insurance elsewhere, which critics say shows the company relies on state programs and other employers to cover its workers.

In addition to improving its coverage offerings, the company plans to open more clinics in stores and reduce the period new part-time employees have to wait before they can buy coverage. Wal-Mart’s “value plan,” which costs about $20 monthly for families and allows three doctor visits and three prescriptions before a $1,000 deductible kicks in, will be offered to half of the company’s employees, Wal-Mart said.

Migden was not swayed. “Wal-Mart’s commitment is not enough and is hardly affordable to their hardworking employees,” Migden said in a statement. She said Wal-Mart’s 70,000 California employees average about $15,000 in annual pay, and even under the company’s improved coverage proposals, workers would be charged monthly premiums and large deductibles.

New Players Enter Debate

In what appears to be an escalating public relations battle, the two sides fired off new salvos last week. Wake-upWal-Mart.com orchestrated press conferences in several states in which current and former Wal-Mart workers spoke out against health coverage they claim is too expensive.

Wal-Mart hired Andrew Young — former ambassador to the United Nations, mayor of Atlanta and civil rights activist — to head a new group, Working Families for Wal-Mart.

Young says Wal-Mart is “helping to include people who have been excluded from economic opportunity.” “I guess I’m a kind of a fan of Wal-Mart because the challenge of the 21st century is to make democracy and capitalism relevant to poor people,” Young told a group of Wal-Mart workers last year. “Wal-Mart does that in a unique way,” he added.

Judging from CEO Scott’s recent comments, part of that “unique way” might be pressuring the government to consider a national health plan.

Related Topics

Health Care Costs Health Industry Insight Insurance Medi-Cal