Wal-Mart’s critics have rightly noted that the company is stingy on health care benefits. (See If it worked for deadbeat dads and tax scofflaws, why not for Wal-Mart?) As noted on Monday (Can Wal-Mart help Romney?), Wal-Mart is responding to the pressure by offering an innovative health plan to increase the percentage of its employees that are covered.
A leaked internal Wal-Mart memo on the topic (written by McKinsey and Co.) in today’s New York Times confirms that the company’s motivation for the new plan is partly to mollify the critics.
Wal-Mart’s healthcare benefit is one of the most pressing reputation issues we face because well-funded, well-organized critics, as well as state government officials, are carefully scrutinizing Wal-Mart’s offering. Moreover, our offering is vulnerable to at least some of their criticisms, especially with regard to the affordability of coverage and Associates’ reliance on Medicaid.
The problem with pressuring Wal-Mart into offering health insurance is that it also encourages Wal-Mart to think like an insurance company, seeking to exclude undesirable risks from coverage. In this case it also means excluding less healthy people from employment.
Satisfaction [with benefits] varies significantly by… segment of Associates. Most troubling, the least healthy, least productive Associates are more satisfied with their benefits than other segments and are interested in longer careers with Wal-Mart.
Wal-Mart is looking for ways to favor healthier people over others for jobs, partly by redesigning the positions to include physical activity. Wal-Mart will be vulnerable to discrimination claims if it goes too far, but it’s an open question whether Wal-Mart’s response to pressure will benefit society in the aggregate.October 26, 2005