Wal-Mart Says It Will Boost Health Benefits

Times Staff Writer

Wal-Mart Stores Inc., under pressure to shoulder more of its workers’ healthcare costs, outlined plans Thursday to improve its benefit offerings, including opening more clinics in stores and shortening the period that part-time employees have to wait before they can buy coverage.

The world’s largest retailer also said it would expand its cheapest health insurance option, an $11-a-month plan that has been offered in selected areas. The “value plan,” which costs about $20 for families and allows three doctor visits and three prescriptions before a $1,000 deductible kicks in, will be offered to half of the company’s employees, Wal-Mart said.

The proposals are in a speech that Wal-Mart’s chief executive is scheduled to deliver Sunday. They follow promises the company made last year to bring healthcare within reach of all its nearly 1.4 million U.S. employees.

Over the last several months, Wal-Mart has come under increasing criticism for what opponents call stingy health benefits. The company released highlights of the CEO’s speech the same day a union-backed group issued a report claiming that U.S. taxpayers spent $1.5 billion last year providing medical care for uninsured Wal-Mart workers.


Wal-Mart said the five-page report was a publicity stunt based on poor methodology.

The company said the number of employees covered by its health plans increased slightly last year to 46% -- below the national average of 60%. It said almost one-third of its workers get health insurance elsewhere, which critics say is evidence that the retailer relies on state programs and other companies to cover its workers.

At a time when expansion is crucial to the company’s future growth, especially along the East and West coasts, the attacks against Wal-Mart are taking a toll, at least in terms of public opinion.

In Fortune magazine’s 2006 list of America’s most admired companies, released this week, Wal-Mart fell eight spots to No. 12. The Bentonville, Ark., retailer, which has more than 3,850 U.S. stores and nearly 2,300 international locations, held the top spot on the list in 2003 and 2004.


The speech by CEO H. Lee Scott Jr. at a National Governors Assn. meeting in Washington is aimed at an audience playing a key role in the company’s latest healthcare battle: state-by-state efforts to force Wal-Mart to pay more of its workers’ medical costs.

In California, state Sen. Carole Migden (D-San Francisco) introduced a bill Wednesday that would require companies that employ 10,000 or more state residents to spend at least 8% of their total payroll on health benefits or make payments into a state fund for the uninsured.

“Wal-Mart’s commitment is not enough and is hardly affordable to their hardworking employees,” Migden said in a statement Thursday. She said Wal-Mart’s 70,000 California employees average about $15,000 in annual pay, and even under the company’s coverage proposals, workers would be charged monthly premiums and large deductibles.

Migden’s bill is based on legislation passed last year in Maryland -- which survived a veto by that state’s governor -- and introduced in several other states.

In his speech Sunday, Scott is expected to denounce those efforts and call on government to work with business on healthcare issues, the company said.

He also will announce that for the first time, part-time employees will be able to buy health insurance for their children, the company said. Part-time Wal-Mart workers now wait two years before being eligible for individual health coverage. The company said it had not yet decided what the shortened waiting period would be.

The company said Scott also would outline plans to expand a pilot program of nine in-store health clinics to 50 sites. Those clinics, the company said, offer nonemergency care to employees and members of the community, many of whom might otherwise go to a hospital emergency room for routine ailments.

In October, Scott had said he wanted to make affordable healthcare coverage available to all U.S. employees of the company, which this week reported annual profit of $11.2 billion on $312 billion in sales.


A company memo leaked just after Scott’s pledge outlined stark recommendations for reining in healthcare costs, such as making jobs more physically rigorous to discourage unhealthy workers and using more part-time workers.

The memo also recommended boosting the company’s image by touting initiatives such as the ones Scott plans to highlight Sunday.

Wal-Mart has said that the memo was a preliminary document and not a final list of proposals.

But critics said Scott’s planned speech this weekend appeared to take its cue from the memo, which suggested “reframing” the issue of uninsured workers as a societal problem as well as engaging in a “sustained communication campaign” about the company’s healthcare offerings.

In its report Thursday, Wake Up Wal-Mart, the union-backed group critical of the company, projected that American taxpayers would pay $9.1 billion in healthcare costs for Wal-Mart employees by 2010.

The group based the figure on the number of Wal-Mart employees now using Medicaid and projections for the company’s growth.

Wal-Mart disputed the report. “The fact is, Wal-Mart jobs move people from public health programs onto private insurance,” said company spokeswoman Sarah Clark.

“Seven percent of associates join Wal-Mart already on Medicaid. Within two years, that number drops to 3%.”