[lbo-talk] FW: NYTimes.com Article: States Are Battling Against Wal-Mart Over Health Care

[Wojtek Sokolowski]

> 
> States Are Battling Against Wal-Mart Over Health Care
> 
> November 1, 2004
>  By REED ABELSON
> 
> 
> 
> 
> 
> In the national debate over what to do about the growing
> number of working people with little or no health
> insurance, no other company may be taking more heat than
> the country's largest employer, Wal-Mart Stores.
> 
> The company, despite its popularity with consumers, has
> grown accustomed to being accused of crushing Main Street
> merchants with its sprawling stores and low prices and of
> driving down wages for workers across the retail industry.
> And more than a million former and current female Wal-Mart
> employees are part of a sex discrimination lawsuit that the
> company is fighting.
> 
> Now, Wal-Mart finds itself under attack for what critics
> see as its miserly approach to employee health care, which
> they say is forcing too many of its workers and their
> families into state insurance programs or making them rely
> on charity care by hospitals.
> 
> Wal-Mart vigorously defends its health care policies,
> saying it offers affordable coverage for all employees.
> 
> The company says it has no way of knowing how many of its
> employees, whom it calls associates, or their families are
> insured under state programs. The larger issue of whether
> companies can and should absorb the soaring cost of health
> care is a national issue, said Susan Chambers, the
> executive vice president who oversees benefits at Wal-Mart.
> "You can't solve it for the 1.2 million associates if you
> can't solve it for the country.''
> 
> A survey by Georgia officials found that more than 10,000
> children of Wal-Mart employees were in the state's health
> program for children at an annual cost of nearly $10
> million to taxpayers. A North Carolina hospital found that
> 31 percent of 1,900 patients who described themselves as
> Wal-Mart employees were on Medicaid, while an additional 16
> percent had no insurance at all.
> 
> And backers of a measure that will be on California's
> ballot tomorrow, which would force big employers like
> Wal-Mart to either provide affordable health insurance to
> their workers or pay into a state insurance pool, say
> Wal-Mart employees without company insurance are costing
> California's state health care programs an estimated $32
> million a year.
> 
> Meanwhile, in Washington State, where the insurance
> commissioner is pushing the legislature to adopt a law
> similar to the one on the California ballot, companies that
> struggle to compete with Wal-Mart while insuring most of
> their own workers have become openly critical.
> 
> "Socially, we're engaged in a race to the bottom," said
> Craig Cole, the chief executive of Brown & Cole Stores, a
> supermarket chain that employs about 2,000 workers in
> Washington and adjoining states and pays for insurance
> coverage for about 95 percent of its employees. "Do we want
> to allow competition based on exploitation of the work
> force?" he asked.
> 
> Wal-Mart, which disputes the California figures and says it
> cannot verify the Georgia and North Carolina data, says its
> employees are largely insured. It cites internal surveys
> indicating that 90 percent of its employees have insurance
> - many through means other than Wal-Mart's coverage because
> they are senior citizens on Medicare, students covered by
> their parents' policies or employees with second jobs or
> working spouses.
> 
> "We are doing everything we can to take care of our
> associates and not shift costs," Ms. Chambers said.
> 
> The company has gone on its own offensive, saying last week
> that it was spending $500,000 to defeat the California
> measure, Proposition 72. The measure is opposed by many
> other businesses, particularly restaurants and retailers,
> and by Gov. Arnold Schwarzenegger, who asserts that it
> would impede the state's economic recovery and lead to a
> loss of jobs.
> 
> Wal-Mart has also been running a television ad nationally
> that features a Wal-Mart worker whose company health
> insurance covered his toddler son's treatments for
> life-threatening liver disease. "Without Wal-Mart,'' the
> father says, "I don't know that he would have made it."
> 
> But critics say the reality for too many Wal-Mart workers
> and their families is no insurance - either because they
> are unable to meet the company's eligibility requirements
> or because they cannot afford monthly premiums as high as
> $264 a month for family coverage on an $8-an-hour cashier's
> wage. Wal-Mart says its employees make $10 an hour on
> average.
> 
> Countering Wal-Mart's television ad, a California group
> supporting Proposition 72 has begun publicizing the case of
> a former Wal-Mart employee, Marco Guillen, who says he
> twice missed the company's annual enrollment deadline for
> health insurance. The first time, he said, was because he
> was confused about his eligibility. The second time, he
> said, was because he was in a coma after being in a car
> accident. His medical bills were about $1 million, he said,
> and were paid by the state's Medi-Cal version of Medicaid.
> 
> Wal-Mart declined to discuss the specifics of the case,
> saying that doing so would violate Mr. Guillen's rights
> under the federal laws governing patient privacy.
> 
> The company says it spent about $1.3 billion of its $256
> billion in revenue last year on employee health care to
> insure about 537,000 people, or about 45 percent of its
> work force. Wal-Mart says that 23 percent of its employees
> are not eligible for coverage, but that it covers 58
> percent of those who are.
> 
> That compares with an insured rate of 96 percent of
> eligible full-time or part-time employees of Costco
> Wholesale, the discount retailer that is Wal-Mart's closest
> competitor nationwide. Costco employees - most of whom are
> not represented by a union - become eligible for health
> insurance after three months working full time, or six
> months part time.
> 
> At Wal-Mart, which has no union employees, many who work
> full time must wait six months to become eligible.
> Part-time workers are not eligible for at least two years.
> Because of turnover, some employees never work long enough
> to become eligible.
> 
> If there is any place where Wal-Mart's labor costs find
> support, it is Wall Street, where Costco has taken a
> drubbing from analysts who say its labor costs are too
> high. Costco's pretax profit margin is only 2.7 percent of
> revenue, less than half Wal-Mart's margin of 5.5 percent.
> 
> Wal-Mart now asks employees to pay 33 percent of the
> company's cost of providing insurance, but says it plans to
> reduce that to 30 percent. So far, Costco has resisted
> pressure to increase employees' share of health care
> premiums beyond a planned target of 8 percent in 2007,
> reasoning that too many of their workers would be forced to
> drop coverage.
> 
> "From the very beginning of time, the founders here felt
> you have to pay a living wage and provide benefits," said
> Richard Galanti, the chief financial officer of Costco,
> which is based in Issaquah, Wash.
> 
> Wal-Mart finds itself up against a national tradition of
> providing health insurance to workers that took root during
> World War II, when wages were frozen and many companies
> offered health benefits in lieu of higher pay. After the
> war, unions at many big manufacturers also demanded
> generous benefits, and workers of all stripes throughout
> corporate America came to expect health insurance as a
> right of employment.
> 
> But in recent years, as global competition has become more
> intense, as organized labor has lost some of its clout and
> as medical costs have spiraled upward, employers have
> become increasingly unwilling to shoulder the cost of
> coverage. In 1987, only a quarter of the people working for
> large companies did not have insurance. By 2001, that
> figure had increased to about a third, according to a
> recent study by the Commonwealth Fund, a New York nonprofit
> group dedicated to health care research. Industry experts
> assume the percentage of working uninsured has continued to
> grow.
> 
> Other data indicate that of the 45 million people without
> health insurance in this country, nearly 70 percent are
> working full time or are the dependents of full-time
> workers.
> 
> Wal-Mart's rise to become the nation's biggest employer and
> largest retailer also speaks to a larger shift in the
> economy in the last generation, as a growing proportion of
> jobs shifted to service industries. Wal-Mart has succeeded
> because tens of millions of shoppers around the country
> flock to its stores for its sharply discounted prices. That
> business model, which is being widely imitated, depends on
> low-cost labor.
> 
> But government officials in various states, as well as some
> other employers, say Wal-Mart should nevertheless share
> more of the financial burden of its workers' health care.
> 
> "The Wal-Mart executives chose to remove the responsibility
> from themselves," said Mike Kreidler, the insurance
> commissioner for Washington State, who is pushing for a law
> requiring employers to provide insurance coverage either
> directly or indirectly.
> 
> Although Wal-Mart officials flatly deny it, some Wal-Mart
> employees say they are encouraged to turn to public health
> care assistance. When Wal-Mart hired Samantha Caizza, a
> single mother of three, as a cashier at its Chehalis,
> Wash., store last November, she says she was told by a
> personnel manager "to get ahold of the state" for coverage
> for her children.
> 
> Unlike many Wal-Mart workers, Ms. Caizza was willing to
> talk to a reporter about her experience because she was
> fired in June - for reasons she said had to do with union
> organizing activities. Wal-Mart said it could not comment
> on her case.
> 
> The company hands out instructions to its employees to help
> them to apply to social service agencies, which Wal-Mart
> says is simply part of the service they provide employees
> who need to have their income verified for any number of
> reasons.
> 
> Many employees say they simply cannot afford the health
> plans being offered. Ms. Caizza, for example, worked about
> 32 hours a week, making $8 an hour. Full-time employees
> make about $1,200 a month on those wages, meaning the $133
> to $264 they are asked to pay for family coverage may not
> be within their reach. And even the cheapest plans come
> with a hefty out-of-pocket price for employees, where they
> may be on the hook for as much as $13,000 in medical costs
> for their families.
> 
> "While I was working there, I couldn't afford it for my
> children," said Beverly Winston, another former employee,
> who says she turned to state-subsidized coverage for her
> children while working at Wal-Mart in Renton, Wash., in the
> late 1990's. Ms. Winston is among the group of women around
> the nation now suing the company for sex discrimination.
> 
> "We work very hard for that to be affordable," said Ms.
> Chambers, the Wal-Mart executive, who said she thought the
> prices for the least expensive plans were "a very
> reasonable opening-price point.''
> 
> With the number of uninsured people in Washington climbing
> - now slightly more than a half-million people, or 9.4
> percent of the population by one estimate - the state is
> grappling with the rising costs of caring for them. "The
> problem is getting much worse," said Mr. Kreidler, who says
> the cost of caring for the uninsured in Washington now
> approaches $400 million a year.
> 
> Asking the hospitals to keep paying the rising cost of the
> uninsured is not a solution, Mr. Kreidler said.
> 
> But Wal-Mart says it is not reasonable to ask companies
> like it to solve the problems of the uninsured and the
> escalating cost of medical care. It needs to be "part of a
> national debate," Ms. Chambers said.
> 
>
http://www.nytimes.com/2004/11/01/business/01health.html?ex=1100338682&ei=1&
en=a0
> 5b41178c0f5ad1
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