Calling Wal-Mart stupid

I sure had a good chuckle reading the Wall Street Journal’s lead story today (Wal-Mart Backs Drive to Make Companies Pay for Health Coverage). As reported, Wal-Mart wrote a letter to President Obama –co-signed by the Service Employees International Union (SEIU) and the Center for American Progress (CAP)– calling for an employer mandate to offer health insurance coverage.

The parts that made me chuckle were the reactions from those who thought Wal-Mart was on their side:

The National Retail Federation, the industry’s main lobby, said it was “flabbergasted” by Wal-Mart’s move. “We have been one of the foremost opponents to employer mandate,” said Neil Trautwein, vice president with the Washington-based trade group. “We are surprised and disappointed by Wal-Mart’s choice to embrace an employer mandate in exchange for a promise of cost savings.”

Mr. Trautwein said an employer mandate is “the single most destructive thing you could do to the health-care system shy of a single-payer system,” under which the government handles health-care administration. The mandate “would quite possibly cut off the economic recovery we all desperately need,” he said.

And this:

The U.S. Chamber of Commerce said most of its members oppose an employer mandate, and it doesn’t think Wal-Mart’s stance will change that. “The kind that the groups in this letter support is the worst incarnation, the most dangerous policy,” said James Gelfand, senior manager of health policy for the group, which represents three million businesses.

Those quotes are pretty lively –much more so than what you typically see from sober minded groups like the Chamber of Commerce!

There’s not much analysis of the reasons behind Wal-Mart’s new approach in the Journal article, and not much in the Journal’s Health Blog either. Comments on the blog post and article are fairly inane as well.

Here are a few reasons that could explain Wal-Mart’s stance, from most to least obvious:

  • Wal-Mart figures it will be pressured into offering health insurance anyway, so wants to make sure that it’s on a level playing field with smaller competitors that might otherwise escape without offering insurance
  • Wal-Mart’s customers are hard hit by health care costs. Even those without health problems are worried about health care costs, which limits their propensity to spend money at Wal-Mart. If customers have health insurance from their employees they can spend more freely on other goods
  • Wal-Mart sees a big growth opportunity in the provision of health care services and/or health insurance and the company wants to make sure there is a big market for its offering

I really hope the last point is true.

July 1, 2009

4 thoughts on “Calling Wal-Mart stupid”

  1. How about this reason. Let’s say Wal-Mart assumes that their employees will have to have coverage. Under a pay or play employer mandate, Wal-Mart could choose to pay a percentage of their payroll rather than provide insurance. A percentage of payroll for generally low-wage workers is likely to be lower than the cost of providing a health insurance policy, which does not vary by income of the recipient. They could save money.

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