WASHINGTON – After years of strenuous opposition, Wal-Mart, the nation’s largest private employer, announced Tuesday that it supports a controversial new requirement that businesses contribute to the cost of employee health insurance.
The retail giant’s endorsement comes as the push and pull on health reform intensifies and could have broad economic and political consequences. Many business groups, displeased with the shape of legislation that has emerged so far, have begun to mobilize against Obama’s top domestic priority.
The president is countering with a series of public events – including a town hall meeting today in suburban Annandale, Va. – and private negotiations with industry players such as Wal-Mart.
Tuesday’s announcement, which came after a White House meeting, brought together Wal-Mart, the liberal think tank Center for American Progress, and the Service Employees International Union, which has often sparred with the retailer over the benefits it provides its 1.4 million workers.
“We are entering a critical time during which all of us who will be asked to pay for health-care reform will have to make a choice on whether to support the legislation,” leaders of the three groups wrote in a letter to Obama. “This choice will require employers to consider the trade off of agreeing to a coverage mandate and additional taxes versus the promise of reduced health-care cost increases.”
The agreement follows on the heels of a deal struck with the pharmaceutical industry to squeeze $80 billion out of health spending over the next decade. Senate and administration aides are reportedly in talks with hospital executives in the hopes of securing a similar pledge.
Three years ago, Wal-Mart battled initiatives in several states that would have required large employers to provide health insurance or contribute money toward workers’ coverage. On Tuesday, company executives said they decided to back a federal “employer mandate” if certain conditions are met: It must be part of a broad health reform bill; it should exempt some small firms; and it must be pegged to a moderately priced benefits package similar to the coverage Wal-Mart offers most of its workers.
“In order to reduce the increase in health care costs you’ve got to cover as many people as possible,” Leslie Dach, executive vice president of corporate affairs at Wal-Mart, said Tuesday after meeting with White House Chief of Staff Rahm Emanuel.
About 158 million Americans receive health insurance through the workplace, though the percentage has dwindled as costs have risen and the economy has soured. Wal-Mart, once criticized for its stingy health benefits, has moved to provide basic coverage to many more workers. Today, 95 percent of employees have some form of health insurance through the company, a family member or the government.
Opinion in the corporate world over an employer mandate is divided.
“This would be bad for businesses, employees and consumers everywhere, even Wal-Mart shoppers,” said Neil Trautwein, a vice president at the National Retail Federation. The federation, which includes restaurants, pharmacies, grocery stores and clothing shops, is pressing for legislation that includes an individual mandate, as well as significant insurance market reforms.
The Wal-Mart agreement “does nothing to advance the cause of health care reform,” Trautwein said. “This suggests the employer community can be picked off and divided. We’re going to redouble our efforts preventing that from happening.”
But some large employers support an employer mandate as a way to “level the playing field,” said Helen Darling, president of the National Business Group on Health, which represents primarily Fortune 500 companies. “A lot of big companies in the retail business already provide it, and they feel that creates a competitive disadvantage for them.”