Wal-Mart and the Affordable Care Act

I'm grateful to my colleague Dr. Don McCanne for organizing the following blog post about Wal-Mart's recent announcement concerning cutting employee health care benefits:

The New York Times
October 20, 2011
Wal-Mart Cuts Some Health Care Benefits
By Steven Greenhouse and Reed Abelson

After trying to mollify its critics in recent years by offering better health care benefits to its employees, Wal-Mart is substantially rolling back coverage for part-time workers and significantly raising premiums for many full-time staff.

Citing rising costs, Wal-Mart, the nation’s largest private employer, told its employees this week that all future part-time employees who work less than 24 hours a week on average will no longer qualify for any of the company’s health insurance plans.

In addition, any new employees who average 24 hours to 33 hours a week will no longer be able to include a spouse as part of their health care plan, although children can still be covered.

Wal-Mart also significantly reduced the amount of money it contributes to the savings accounts workers can use to pay for medical bills that are not covered under their plan. Last year, the company put $1,000 into accounts for families but it will cut the amount by half for next year to just $500.

Barbara Collins, a sales associate at the Wal-Mart in Placerville, Calif., said that the premiums for the H.M.O. plan for herself and her 5-year-old son would rise to $18 every two weeks from $10. Her big concern, she said, was that her deductible would jump to $5,000 a year, from $1,000 — a daunting amount considering she earns $19,000 a year.

Dan Schlademan, director of Making Change at Walmart, a union-backed campaign, condemned the changes.

“No wonder people are protesting in the streets,” he said. “This is another example of corporations putting profits ahead of what’s good for everyday Americans. It’s outrageous and damaging to many hard-working families that the biggest corporation in America is increasing health care costs for many employees by 40 percent.”

Find the New York Times article here.

And. . .

Forbes
September 21, 2011
The Richest People in America

#6 Christy Walton $24.5B

#9 Jim Walton $21.1B

#10 Alice Walton $20.9B

#11 S. Robson Walton $20.5B

Find the Forbes article here.

And. . .

Social Security Online
October 21, 2011
Wage Statistics for 2010

By definition, 50 percent of wage earners had net compensation less than or equal to the median wage, which is estimated to be $26,363.55 for 2010.

Find the Social Security document here.

Dr. McCanne's comment:

A fundamental principle in the Affordable Care Act is that we would continue to rely very heavily on employer sponsored plans for the majority of health care coverage in America. How is that working? Wal-Mart, the nation's largest private employer, is increasing the insurance deductible to $5,000 for an employee earning $19,000 per year.

Yet look at her employers. Four members of the Walton family are amongst the eleven wealthiest individuals in America, each worth over $20 billion. (Compare that with the Koch brothers, who own Congress, each worth $25 billion.) This is in a nation with a median wage of $26,364.

Relying on employers to do the right thing no longer cuts it. Not only do they fail to pay enough, they can no longer be relied upon to see that their employees and their families receive adequate health benefits.

My comment:

It is a major flaw of the Affordable Care Act that employers remain on the hot seat for health care benefits.  Private sector employers like Wal-Mart are in business to make as much money as possible for their owners.  As such, they will minimize any and all costs, including health benefits.  Smaller employers are often not able to afford any health benefit.  Employment is simply not the proper setting for health care financing.  Whether people are employed or not has nothing to do with how health care should be financed.

Dr. Joe Jarvis