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Why Is Walmart Endorsing Employer Mandated Healthcare?

Gina-Marie Cheeseman
| Thursday July 2nd, 2009 | 29 Comments

180px-Walmart_exterior.jpg
Walmart and the Service Employees International Union (SEIU) sent a joint letter to President Obama on Tuesday telling him they endorse requiring large companies to provide health insurance for employees. My first response after reading an article in the New York Times about the Walmart/SEIU letter is not printable. However, I will give you the PG version: What the heck?!
I am not surprised that Walmart teamed up with SEIU because in 2007 Walmart and SEIU took part in a campaigned called “Better Health Care Together.” The goal of the campaign was to extend healthcare coverage to all Americans by 2012. I am surprised that Walmart is endorsing an employer mandate.


Let me give you a few facts about Walmart before I proceed with this article. Walmart is the largest private employer in the U.S. with 1.4 million employees. According to the NY Times article, 53 percent of its employees are currently insured through the company, all together, 94 percent have some insurance– including 36,000 employees who receive Medicaid. Walmart Stores Inc. is the world’s largest retailer.
Now back to my regularly scheduled article. Leslie Dach, Walmart’s top lobbyist who met with White House chief of staff, Rahm Emanuel on Tuesday, said, “We’re for an employer mandate, but we believe that it has to be accompanied by these measures that are really going to deliver on the savings. If any business is going to be asked to take on an employer mandate, to face changes in the tax laws, there should be some sense that the promise of the bill to reduce health costs will actually occur.”
The letter stated that Walmart and SEIU are for an employer mandate “which is fair and broad in its coverage.” The letter also said, “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.”
Ezra Klein of the Washington Post interviewed Walmart spokesperson, David Tovar. When Klein asked him why Walmart endorses an employer mandate, he answered:

“We understand that others may have different opinions. Others in the business community may have different opinions. But for our business, this is the right thing to do. Every associate can become eligible for health care at Walmart. And we think that a mandate, coupled with this trigger mechanism and other cost-savings measures, will eliminate waste and increase competitiveness.”

Klein pressed Tovar for more of an answer, by asking why Walmart endorses an employer mandate rather than “a plan that dissolves the employer market entirely?” Tovar responded with a very vague answer: “Look, this is the position that we took. We wanted to be part of the solution. We wanted to lend our voices to the momentum behind reform.”
Tovar defended Walmart’s insistence that a “trigger mechanism,” enacting cuts if costs are not kept down, by saying, “If we’re going to agree to this type of mandate, we have to have that fail-safe, which is the trigger.”
One of the comments posted beneath Klein’s interview is interesting:

We of the Walmart watchers (see our blog TheWritingOnTheWal.net) have been speculating on Walmart’s “change of heart”.
This one slip seems to make sense came from a lobbyist who said “Target’s health costs are lower”. In other words by forcing other firms into a mandate Walmart is hoping that their costs will rise relative to their own and make them less competitive.
Everything Walmart does is focused on their bottom line. Claims of altruism or looking after employees are bunk.

I conclude this article with a heavy dose of skepticism regarding Walmart’s motives. I am equally unsure whether an employer mandate should be part of healthcare reform. The U.S. Chamber of Commerce and the National Federation of Independent Business are opposed to it, as are many other major trade organizations, and that does not bode well for any legislation that contains an employer mandate.
What do you think?

Ed note: We edited a line regarding the percentage of employees currently insured by Walmart to correct a typo caught by a reader. Thanks for your diligence!


▼▼▼      29 Comments     ▼▼▼

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  • R. Page

    Very nice post. I’m not really bothered that WalMart is still focused on one bottom line – the financial. The thing that bothers me is that they still come across as evasive and manipulative when they talk about these things. I mean, who’s going to believe this is a sudden change of heart? I think you’re exactly right that they’re hoping to batter their competitors with higher costs, while taking on marginally lower costs themselves. It’s a game, simple as that.

  • http://www.gina-mariecheeseman.com Gina-Marie Cheeseman

    R. Page, I feel the same way you do. Of course a business of any kind if focused on the bottom line. You hit the nail on the head: they do come across as evasive and manipulative.

  • Tyler

    I’m not “skeptical” of their intentions. Wal-Mart is a well-oiled machine, and expecting anything else from them is naive. Whether they reveal the details or not, the reason behind this is purely for business purposes that somehow benefit the Wal-Mart.

  • Bud Smith

    Um. Not “all” business are focused on the bottom line, ie most profits. Some business run with an eye towards the bottom line but understand that there is more to business than the maximum amount of profit.

  • Mike

    Wal-Mart favors an employer mandate for a very simple reason- it would drive up costs for all of their competitors, while reducing their own costs. It is a sneaky way to have the government hurt competitors like Target, not to mention mom ‘n’ pops, whose current employee health care coverage doesn’t match Wal-Mart’s.

  • Dave Shires

    Bud – I think you’re right. Hence the theme of this site is the “triple bottom line”. But Wal-Mart is pretty old school. Not that I’m criticizing them, if the math works out and the employees are not getting screwed, I’m all for it.

  • http://www.brianward.us/ Brian Ward

    It’s very simple: Wal-Mart is trying to drive up costs for the smaller businesses with which it competes. In the end, providing health care to all of its employees will likely cost the company far less than the total revenue they would receive from all that new traffic they would get from the people who won’t have anywhere else to shop! Plus, now that they’ll have established a newly-minted total monopoly, they can charge whatever they want for anything without facing serious competition: ah, the glory of the so-called free market. Case in point: there’s good regulation and there’s bad regulation and this is definitely a case of the latter. What we need to do is dissociate health care coverage from employers, be it through a public plan or, more preferably, a universal singler-payer system.

  • Dave Shires

    Brian – that’s an interesting point. I should add that this shouldn’t screw the taxpayers either. What we really need, in conjunction with what you say, is more awareness on the part of people to actually engage with the people selling them things. I don’t think that’s pie in the sky – it’s a basic community thinking which has sadly been erased in the USA – I think largely because anonymous sprawling chain stores will never feel like legitimate community.
    So, really, if we keep gas prices high, thus stimulating the demand for human-scale neighborhoods, people will re-discover human scale retail as well. That’s the only hope.

  • John davis

    Sounds like WalMart would be a pretty cool place to work!
    RT
    http://www.anonymize.tk

  • Anonymous

    Who cares about their motives? Mandated healthcare is awesome.

  • asdf

    asdfasdf

  • Mike Litoris

    53% of employees are uninsured.
    What percentage of that are just part timers and kids working there going to school?
    How much should be paid to people that stock shelves and handle the cash register? Shouldn’t these people have some ambition? Why aren’t you bashing their parents that brought up such slackers?
    Are you just a shill for the unions?

  • Chuck

    It’s very simple. Walmart offers healthcare to all its full-time employees. Very few retail businesses or entry level jobs can say the same. So all this time people have been tearing down Walmart for being a “sweat shop” while meanwhile you talk to employees at gas stations, restaurants, big box retail stores, movie theaters, etc., and I guarantee you most of them will tell you full-time healthcare is not offered. Walmart is prepared for this initiative, other companies are not. Walmart does promote health issues more than many companies, but I also think there is a business strategy in that the retail giant is forcing the American public to put its money where its mouth is. Walmart can make it, can all these other companies who avoid criticism for not offering healthcare?

  • http://www.timefortermlimits.com Patrick Henry

    Regardless of what Obama wants, or congress says, there is no Constitutional authority to do anything with health care. To argue about the details is to accept the false premise that the federal government has any business in it all.
    We must stop debating policy when the premise is flawed to begin with.

  • Mike O.

    This insurance bill, as envisioned in the Senate, needs to be met with resistance.
    As of today, auto insurance is mandated in all but two states (Wisconsin and NH), and Wisconsin is looking to mandate it this year.
    The Senate bill provides a $1000 “penalty” if you do not purchase health insurance of some kind, enforcable through the IRS.
    This penalty preys on the young, think about it. Those least likely to need it are required to buy it, to subsidize the rest.
    In either case (auto or health), you are being dictated to as to where you spend your earnings. It’s unconstitutional.

  • http://whatareyouwatching.uni.cc Television Spy

    I still don’t get why they’re doing it.

  • Alec

    Seeing as how the NFIB and Chamber of Commerce are the most anti-labor, anti-worker, anti-middle class organizations in America, I think Wal Mart may have a solid stance. I am sure it is self serving, but if NFIB and the Cahmber are against it, it must by default be good for the American family.

  • http://www.gina-mariecheeseman.com Gina-Marie Cheeseman

    Mike, you said:
    “How much should be paid to people that stock shelves and handle the cash register? Shouldn’t these people have some ambition? Why aren’t you bashing their parents that brought up such slackers? Are you just a shill for the unions?”
    Are you a snob? Are you aware of the unemployment rate? Where I live it is almost in the triple digits. People have to make a living. Money is money. Come to the real world.

  • http://www.gina-mariecheeseman.com Gina-Marie Cheeseman

    Mike O., I agree with you. I don’t like the idea of penalizing people for not buying insurance. People don’t buy it because they can’t afford it. Healthcare is a right and not a privilege. The whole system stinks. We need REAL healthcare reform.

  • raichle

    Triple digit unemployment? That would mean more people unemployed than exist.

  • griffin

    Did anyone here actually READ the NYT article. It does NOT say that 53% of WMT employees are uninsured. Here’s what it says:
    “With 1.4 million employees, Wal-Mart employs more people than any other private company in the United States. Slightly more than half of Wal-Mart’s employees, 53 percent, are insured by the company, although Mr. Dach said the company estimated that 94 percent of its workers had some form of insurance, either through spouses, parents or – in the case of 36,000 Wal-Mart employees – Medicaid, the government insurance plan for the poor,”
    That is a VERY big difference, and a huge error by the author if this article.

  • Jen Boynton, Editor

    Hey Griffin, thanks for the catch! We corrected the piece.

  • JanSimpson

    Walmart is supporting employer manadated healthcare insurance for predatory reasons – it will put their competitors out of business – And why doesn’t Walmart self insure and have all of their employees with healthcare insurance or better yet – offer it to their customers – Goldman Sachs AIG, JP Morgan Chase Walmart GE are the same –

  • http://www.gina-mariecheeseman.com Gina-Marie Cheeseman

    Sorry, I meant to say 30 percent. One thing about commentators, they catch EVERY error. Thanks for that because everyone needs an editor. I live in the Central San Joaquin Valley of California, btw.

  • http://www.gina-mariecheeseman.com Gina-Marie Cheeseman

    Sorry, I meant to say 30 percent. One thing about commentators, they catch EVERY error. Thanks for that because everyone needs an editor. I live in the Central San Joaquin Valley of California, btw.

  • Bubba_bigbox

    Just becasue Walmart workers have health care doesn’t mean that Walmart is paying for it. In may cases, it is the employee that puts part of their paycheck into healthcare insurance each pay period.
    Perhaps, and I dont’ know this for sure, but perhaps the choice to have coverage at Walmart is not voluntary, but is mandated by Walmart to its employees. You know, the old you must sign up for our health care program at X-dollars per pay. Maybe that is why their numbers look so good.

  • James

    (Waving at Target) Hi Target! I’ll be shopping with you from now on!

  • soonerfootb

    Forcing Americans to make monthly payments to a corporation (mandated healthcare) is flat out wrong. It's never been done in the U.S. before. It's scary. And please don't believe the line that “this is like car insurance”, it's not. Not even close. Limited liability auto insurance is only for drivers using public roads to insure against damage to those roads or other drivers. Drive around on your private property all you want and see if you have to pay auto insurance. And what about groups like the Amish? This would set a legal precedent that takes away your basic right to say “I do not want to buy this”

  • soonerfootb

    Forcing Americans to make monthly payments to a corporation (mandated healthcare) is flat out wrong. It's never been done in the U.S. before. It's scary. And please don't believe the line that “this is like car insurance”, it's not. Not even close. Limited liability auto insurance is only for drivers using public roads to insure against damage to those roads or other drivers. Drive around on your private property all you want and see if you have to pay auto insurance. And what about groups like the Amish? This would set a legal precedent that takes away your basic right to say “I do not want to buy this”