Labor unions as well as some consumer advocates protest the idea of government officials partnering with Wal-Mart and paying for its help. They contend that the nation's largest retailer has no place advising others on health coverage when so many of its workers don't qualify for company benefits and end up in taxpayer-funded programs such as Medi-Cal.
"We are appalled and offended that the exchange would contemplate partnering with Wal-Mart and other retailers notorious for failing to provide health benefits to many of their workers and providing substandard benefits to the workers who do qualify," said James Araby, executive director of the United Food & Commercial Workers Union's Western States Council. "That is highly contradictory to the mission of the program."
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Wal-Mart defended its employee benefits and said they exceed what the retail industry generally offers. A spokesman for Wal-Mart said it supports the state's efforts, but it would be premature to discuss any partnerships.
Even some of Wal-Mart's critics say these complaints are misguided because the opportunity to reach huge numbers of the uninsured while they're shopping is too good to pass up. California is ahead of other states in implementing the Affordable Care Act, and this fight over retailers' role could portend future battles across the country.
"Wal-Mart isn't a white knight," said Nelson Lichtenstein, a professor of history at UC Santa Barbara and a frequent critic of Wal-Mart. "But I am in favor of anything that gets people enrolled. Put a table in Wal-Mart, Best Buy, Costco and CVS pharmacies. I'm for it all."
On Wednesday, labor leaders discussed their concerns with officials at Covered California, the state's new health insurance exchange, in hopes of crafting requirements for participating retailers to ensure they are providing comprehensive health benefits. Union officials vow to seek legislation in Sacramento if a compromise can't be reached.
Peter Lee, executive director of Covered California, said the state wants to work with a variety of retailers and other organizations to maximize enrollment in a state as vast and diverse as California. He said the federal healthcare law imposes new requirements on employer-based coverage, and he's not interested in adding more restrictions on retailers.
"There have been strong concerns raised by some unions and others that some employers have insurance practices that are at odds with our mission," Lee said. "We are not changing our overall retail strategy, and it would be a distraction to have legislation about setting different standards for who the exchange can work with."
Exchange officials are expected to finalize the details on these retail partnerships soon.
Labor unions and other policy experts have long criticized Wal-Mart for failing to provide better health benefits to its hourly workers and their families. By doing so, they say, Wal-Mart shifts some of those employee healthcare costs onto public programs such as Medicaid.
In this debate, California labor groups cite a 2004 UC Berkeley report that found Wal-Mart workers' dependence on public programs in California, such as Medi-Cal and food stamps, cost taxpayers about $86 million annually. Nationwide, it estimated the cost of public assistance to Wal-Mart workers could be as much as $2 billion annually.
Labor leaders have fought unsuccessfully for years to unionize Wal-Mart workers. The retailer has 250 stores in California, including Sam's Club outlets. Grocery chains in California, such as Safeway and Kroger, tend to be more unionized and offer richer benefits to store employees.
"Wal-Mart is one of the problems health reform is trying to fix," said Sara Flocks, public policy coordinator at the California Labor Federation. "Wal-Mart is the driving force behind taking insurance away from Californians."
The Bentonville, Ark., company said more than half of its 1.4 million U.S. workers are covered by company health insurance and it provides an employee-only plan starting at less than $38 a month with a $2,750 annual deductible. Wal-Mart said it pays about 60% of overall medical costs for eligible workers.
"We want to ensure healthcare is affordable to our associates and we care about it being affordable to our customers too," said Wal-Mart spokesman Randy Hargrove.
Araby, the labor leader, said he has suggested that Covered California require its retail partners to offer insurance coverage that pays at least 80% of workers' medical costs and for those employers to cover at least 50% of employee premiums.
Nationally, 40% of retail workers had employer health benefits last year, according to the Kaiser Family Foundation, compared with 62% of employees at all firms offering benefits.
Overall, retailers say they're eager to do their part to educate consumers and that other issues shouldn't distract from the job at hand. "Do you want a successful implementation or do you want to play politics?" said Bill Dombrowski, chief executive of the California Retailers Assn.
The state is looking to train more than 21,000 "assisters" statewide to explain the new coverage options to residents and to help them enroll starting in October. Coverage would take effect in January, when most Americans will be required to have health insurance or pay a penalty.
Those assisters in California can earn $58 for every successful application. The state is considering training employees of Wal-Mart and other retailers to be in-store enrollers and to work at Covered California kiosks, similar to how mobile phone companies sell their products inside big-box retailers.
Under that scenario, the state could pay Wal-Mart for its help with marketing and enrollment. There is also discussion of permitting stores to "co-brand" with Covered California through a retailer's website and TV and radio ads.
Last year, Wal-Mart raised the number of hours its newly hired part-time employees must work to qualify for health benefits to 30 hours a week, up from 24 hours previously. The company said it made the change to conform with rules under the federal healthcare law that define full-time work as being more than 30 hours a week.
"The Affordable Care Act has a number of rules that will put penalties on large employers that don't provide adequate coverage," Lee said. "It is not the job of Covered California to be the enforcement mechanism for that."