Wal-Mart’s neglect leads to healthy debate
The Washington Legislature has shelved a bill that would have forced a handful of large companies to dedicate 9 percent of payroll to health insurance. Just as well. For many companies conscientious about employee care, 9 percent would become a floor, not a ceiling, as they look for ways to remain cost-competitive.
Competitive, that is, with Wal-Mart.
The world’s largest company was the legislation’s primary target, and with good reason. Many Wal-Mart employees are inadequately insured, or not insured at all. That might be a matter of indifference to all but employees and their families, except for the fact that Washington taxpayers backstopped Wal-Mart to the tune of about $12 million in 2004 because 3,100 employees in the state collect state Medicaid benefits. That’s $3,871 each. Inexcusable for a company that reports annual profits exceeding $10 billion.
Other companies, Target and McDonald’s among them, also have employees on Medicaid or the state’s Basic Health Plan, as does the State of Washington itself.
Meanwhile, Issaquah-based Costco Wholesale manages to offer excellent benefits and still competes with Wal-Mart and affiliate Sam’s Club. The commitment to its customers is the same. Commitment to employees is in a whole other league.
Other Wal-Mart competitors are struggling.
In a letter sent to state House of Representatives Speaker Frank Chopp earlier this week, the president of Safeway Inc.’s Seattle Division complained about the “unfair advantage” companies that do not provide full medical coverage for their employees have over those who do. Health care cost the grocery chain $1 billion in 2004, wrote Greg Sparks, considerably more than Safeway’s net income. By 2008, he says, medical bills will exceed net income for the average U.S. company. He did not note that the financial challenges are becoming particularly acute for grocers because the industry operates with margins among the lowest for any business.
That makes for a great environment for Wal-Mart, which uses its buying power to squeeze suppliers. The company’s edge increases with every dollar saved on health benefits. And it controls payroll by simply handing some of the bills to the state.
But neither Sparks nor Chopp, who refused to bring the payroll bill to a vote, consider the 9-percent solution the real answer. There must be a longer term strategy for resolving the health care crisis, Chopp says. “I want to be sure the steps we take are constructive.”
Sparks’ language is a little stronger.
“Our nation’s health care system is broken,” he wrote Chopp. “Our goal will be to continue working to forge responsible changes by working in a bipartisan manner to end this travesty.”
A payroll measure might still come up as an initiative, but mandating a certain level of employer expenditure for health insurance is the wrong policy. What’s right for Wal-Mart will not be right for the neighborhood hardware store. And what’s right for a 40-year-old woman with a family will not be right for a 22-year-old intern. To its credit, Wal-Mart does offer a variety of health plans. But participation, as with most companies, is optional.
As it set aside the payroll legislation, the House authorized a state study of those who receive state medical assistance to determine who they work for, the size of the company, how many hours they work and other information that will help officials determine not just what big companies are providing in the way of health care, but all companies. Results — if funding is provided — would be due in November. The report will recommend ways to reduce the cost to the state of covering individuals who have full- or part-time jobs with employers financially able to help with those costs. Proposed cuts should not cause low-income employees to lose their medical coverage.
Ultimately, government will have to take the burden of health care benefits off the shoulders of employers. Our system is indeed a travesty. Health savings accounts may be part of the answer. Some type of national Basic Health Plan should be in play. What we do know now is that Washington taxpayers are subsidizing a corporate behemoth.
Of course, if Wal-Mart were building a sports stadium, that would be OK.